Offshore Outsourcing (Essay Sample)

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Offshore Outsourcing
Despite being a highly controversial topic in the USA, offshore outsourcing has become an increasingly standard practice in the business world. Firms undertake outsourcing as a cost-reduction strategy through transferring portions of their work to outsiders, regarded as “offshore” when such outside suppliers are foreign (Investopedia). Various advantages and disadvantages accompany the practice of offshore outsourcing. However, its inevitability, prevalence, and acceptability today means that offshore outsourcing debates and deliberations should shift toward managing the risks involved and adapting to the competitiveness of offshore suppliers.
The main arguments raised by critics of offshore outsourcing revolve around the perception that the strategy is a myopic move by organizations that contributes to the unemployment problem in the USA. Pearlstein, a business and economics expert, notes concerns that offshore outsourcing could be precipitating a long-term structural unemployment problem in the USA that hollows out entire industries. In this case, Pearlstein highlights recent raw data from the Commerce Department indicating that American multinationals cut 2.9 million domestic jobs while creating 2.4 million jobs abroad. Both legal and illegal immigration exacerbate the problem, given that low-wage immigrant labor pushes American citizens out of jobs locally while firms still incline toward outsourcing.
However, Pearlstein notes that offshore outsourcing cannot be reduced to a question of raw statistics, given that the resultant heightened firm performance may boost local employment in line with economic theory predictions. Further, questioning offshore outsourcing is not just opposition to an inevitable development in the business world, but also indicates American hypocrisy in cases where globalization forces have placed the nation at a disadvantage. In this case, the USA is famous for pushing for free trade and an end to protectionism where its firms, capital, and labor are set to benefit. Opposing offshore outsourcing represents a hypocritical response from American stakeholders when faced with more competitive service production destinations.
The wider economic positives, inevitability, and desire to end hypocrisy mean that a change in perception toward offshore outsourcing is necessary. Discussions should shift toward managing the risks that accompany offshore outsourcing, such as regulatory issues, currency fluctuations, planning complexities, cross-cultural management problems, service integration risks, and third-party relationship challenges (Zechnich). Such a move would allow firms to maximize on the benefits of offshore outsourcing in areas such as cost-cutting and superior service. Further, the question of offshore outsourcing should force Americans to adapt to heightened global competitiveness. Schectman notes positives in such adaptation, highlighting American firms that provide low cost tech workers in settings outside the traditional American tech capitals. Rather than complain and oppose offshore outsourcing, Americans should take cue from the American firms that are taking advantage of narrowing wage gaps in the likes of India to contribute to the rising popularity of “nearshoring” over offshore outsourcing (McGrath). Seeking ways to outcompete t...