Growth of Outsourcing

When looking at the job market, there is more than just looking at how much the job pay or the benefits. You have to consider how that job is doing in the market and will it be able to stay above standards to compete in today’s society. Many companies such as manufacturing companies are outsourcing their companies to foreign countries now. In recent studies and research, it shows that there isn’t just one reason why these companies are doing such, but there are many. There are many reasons why companies are being informed on outsourcing their manufacturing location. One would be TCE (Transaction Cost Economics). TCE focuses on balancing out the cost of market transactions making, and buying decisions. Although, when we take jobs away from the United States and leave citizens here jobless. It may be a loss for the job market, but it’s a gain to the manufacturing companies because they are now exporting, which means low labor cost by host governments for production locally. Broadly, it has been believed that the reason companies outsource is because of the high cost of U.S. labor. Tragically, it’s really unfortunate for the automotive industry that the labor has to be outsourced; still leaving many citizens with no choice but to find something else. Outsourcing is often the easy answer for companies, but it is not always the right answer. Companies don't resolve the ultimate issue of ineffectiveness but simply reduce the hourly rate. By reducing hourly rates, that means cutting cost of the problem which then moves the problem to countries such as India, China, Brazil, and other low-wage countries.

Growth of Outsourcing

“Outsourcing has taken on new meaning for the American IT industry,” as stated by Pfannenstein and Tsai(2004). The IT field is a big industry that highlights the masterminding behind all the technical support ran by these industries that are being sent overseas. The outsourcing of IT has grown tremendously because of the low labor and other benefits that they get, that they want get, if they insourced everything. Citizens in the U.S., every day, wonder why companies outsource and the first answer is, “low labor cost.” Even though that’s a high percentage, companies want to focus on their core businesses and create value for their shareholders who invest in the companies. The ultimate goal for these companies that are outsourcing is to save financially so that companies can save right at 15 percent of the cost by doing the labor themselves. Once again the primary reason for offshoring IT work is to lower operating cost. People who work in Asia and other markets range from 30 to 75 percent lower than the United States, which also includes better flexibility with having 24/7 operating hours.

“There have always been pluses and minuses to foreign trade” says Evan (2008, 80). The positive side to foreign trade is that consumers