Reasons Why We Outsource Us Jobs Abroad

In: Business and Management

Submitted By joselitodelacruz
Words 366
Pages 2
Reasons why we outsource U.S. Jobs:

- Lower Wages. Simply put, wages for manufacturing jobs in the U.S. are generally more expensive than the vast majority of developing countries and are likely the most attractive rationale for outsourcing American jobs.

- Less Regulatory Costs. The regulatory compliance cost for employing domestic labor can be a potentially bigger component of total worker cost than wages, per se. Examples of these costs or taxes on business include social security, Medicare, FICA, OSHA compliance, unemployment insurance, etc. When U.S. businesses consider outsourcing to China, India, or Mexico, the above labor expenses can be avoided.

- Tax Benefits. Several foreign countries, anxious to lure American jobs to their shores, offer enticing broad tax incentives to U.S. multinational firms.

- Ability to Downsize at Will. Downsizing or upsizing at will provides American business managers with flexibility when addressing product demand

- Quicker Turnaround Time. For business, in general, but especially for smaller firms, when a decision to expand has been made, companies usually need to interview, hire, and train new employees.

- Uncertainty over Political/Business Climate. Uncertainty about the political/economic legislation coming out of Washington is frustrating for American business and makes it difficult to pursue long-term capital expenditure.

- Accelerated Time to Market. Outsourcing allows U.S. companies to access workers who, for the most part, are already trained for jobs that businesses may need.

- Commodification. Large pools of outsourced venders can reduce labor costs - or allow for the commodification of physical resources.

- Contractual Certainty. Finally, outsourcing can provide an understood legal contract (which can compensate companies…...

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