They Say I Say Chapter 1 Summary

Posted By Admin @ Feb 24, 2022

Tittle: Impacts of Offshoring and Outsourcing on the Domestic Business

Type: Report

Subject: Business




Impacts of Offshoring and Outsourcing on the Domestic Business

An on-going pressure intended for advanced productivity along with the increased profitability in the modern companies combined with the availability of potential low-cost labor in developing countries has triggered lots of companies to consider in offshoring and outsourcing. The reason behind this is due to those companies have found out a big prospect of suggestively lower-cost labor as a tantalizing invitation to move the business towards offshoring and outsourcing. On the other hand, despite the figure that offshoring and outsourcing could deliver many benefits to the multinational companies, but up till now, these two things are still being criticized by domestic businesses. In fact, there is a controversy that lots of people view offshore and outsourcing to be harmful to the domestic economy. In addition to this, there is also a concern around the quantity of high-paying profession opportunities that are occupied by foreign workers. However, some business persons view this kind of outsourcing as a trade form and highly believe that, in large, both offshoring and outsourcing are a form of trade and they also believe that trade will mostly bring benefits for society. In addition to this, they also state that any type of restriction against this will definitely damage the economy (Driffield, Pereira, & Temouri, 2017).

Positive Impacts

• Provide great potential to offer long-term benefits for the economy

It appears that the business person who proponent with offshoring and outsourcing are the ones who support free trade. Most of them are economists who approach these two subjects by viewing the long-term impact of the economy. Their main argument has mentioned that international outsourcing has a great potential to offer long-term benefits for the economy. They also believe that both offshoring and outsourcing will able to lower the costs and also inspire competitiveness as well. Furthermore, according to them, the stemming of cost reductions from offshoring and outsourcing will, in the end, lower the prices of the product. Also, the advanced demand and profit which come from offshoring and outsourcing can be utilized for the employees’ benefits in which the employees will able to present more productivity in each hour, and thus, will drive up the actual wages. Moreover, research also has mentioned that 2/3 of the economic profits derived from offshoring into the economy of host countries. The lower prices can see the benefits made for the economy of both products and services, extending market places for the products of the host countries, as well as improving the revenues for the domestic companies (Choi, Ju, Kotabe, Trigeorgis, & Zhang, 2018).

• Huge opportunities for high-quality jobs availability

Likewise, huge opportunities for high-quality jobs availability have also formed in the host countries. In contrast, there are only a few numbers of developed countries that have a perception that offshoring will be able to deliver significant benefits for the economy in their countries. Another study has highlighted that offshoring and outsourcing could benefit the whole economy of the host countries. In fact, both offshoring and outsourcing have the capability to build up a stronger economic foundation and also improve domestic consumption (Tate, 2017).