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The Politics and Economics of Outsourcing

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Ranjit Dhindsa Political Science 102 (Nate Evans) Professor Kennedy 15 April 2004 The Politics and Economics of Outsourcing As globalization becomes an inevitable phenomenon in today's world economy, several U.S. companies and corporations are faced with choices that will affect their edge in both the world and domestic markets. The most controversial choice which these firms are facing today is weather or not to outsource. Outsourcing, the current buzzword in today's business world has been the focus in economic news for the past two years. It has become a highly debatable practice which has significantly affected the United States job market, foreign relations, and role in the global economy, specifically in the information technology industry. However, the debate over outsourcing lies in weather its ramifications are detrimental or beneficial to these factors being affected. The answer to this question is highly dependant on the prospective and scope from which outsourcing is being perceived. Meaning, if it is from a Chief Executive Officer or an unemployed software engineer, and weather the implications are being interpreted on a domestic or international scale. In any case, the answers to these questions are extremely important to the American people, and the business world at large. First and foremost it is important to define outsourcing. ...read more.


High volumes of complaints received from companies such as Dell regarding poor communication skills and thick accents has caused Dell to relocate its office back to the United States. Capital One has recently removed a 250 person call center in New Delhi due to workers issuing unauthorized lines of credit to boost sales. Identity theft and personal data has also been comprised due to outsourcing, since the information being sent overseas is difficult to guard in foreign countries. Even though these circumstances are arising, several of these companies that have experienced drawbacks are still committed to outsourcing. According to research analyst Frances Karamouzis, "Companies are focusing on relentless cost-cutting and are off shoring their problems rather than finding a true business solution" (Stone). For the most part outsourcing has an overwhelming beneficial value for U.S. businesses, but instinctive thinking seems to suggest otherwise that sending American jobs overseas is counter productive this is not taking into account the more favorable qualities of outsourcing. In terms of outsourcing as a beneficial business practice, several proponents argue two main benefits: innovation and better jobs. According to the pro outsourcing argument, companies that outsource fundamentally create opportunities to focus their resources on innovation. ...read more.


John Kerry has been against outsourcing and has proposed several tax initiatives on big business in order to deter them from the practice. Kerry is said to have nicknamed these corporations "Benedict Arnold companies," and is cantering the topic of unemployment in the upcoming elections around the ramifications of outsourcing. However, recent findings have shown inconsistencies with his stance on outsourcing in that he is slowly reversing himself in light of its overall economic benefit. The United States is a capitalistic nation, thus there will always be competitive competition and strategies on the part of big business to become profitable. Outsourcing has definitely altered the U.S. business world and economy, and although the most debatable issue is weather or not this altercation has been beneficial or detrimental. The scale seems to be tipped towards the beneficial side. Outsourcing is a relatively new concept for several business firms, so only its short term effects are present. However, taking into account the testimonies of several economic analysts the United States will see a great turn around, and the potential of a booming economy due to the innovation and highly productive companies. As it was said earlier outsourcing is simply a case of politics vs. economics, and unfortunately the political argument is clouding the better judgement of the true benefits that it can bring to the United States. ...read more.

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