Negative Effects of Outsourcing Essay Example | Topics and Well Written Essays - 1500 words

Negative Effects of Outsourcing - Essay Example As a result, there is a debate concerning the benefits and costs involved in outsourcing (Wikipedia, 2007). This paper discusses some of the negetive impact of outsourcing jobs on US economy and society. Outsourcing jobs to other countries will negatively impact American Society by depleting the availability of jobs in the US, decreasing the level of customer service we receive, and reducing our privacy. There are arguments for and against outsourcing of jobs in United States. Many of them suggest that outsourcing has had a negative impact on the American economy. However economists and government officials who are supporter of outsourcing of jobs to other countries stress the overall benefit and long-term advantages of this practice for the American economy. Unfortunately those who have lost their jobs due to the emerging outsourcing businesses to foreign competition often discover that the creation of higher paying jobs to replace ones that are lost has not occurred. As a result of this there are many who are undergoing mental trauma. There is a great deal of impact of outsourcing on the economy. It contributes to a deteriorating the economy as it contributes to the trade deficit and exports the American knowledge base to other countries. While outsourcing has helped to improve the lives of people in other countries, it should not be done at the cost of creating unemployment in America. Outsourcing of jobs at a lower wage may benefit the company, but it has serious impact on those who loose jobs and deteriorate their living standards. Taking a correct estimation of the costs of outsourcing would establish the fact that keeping jobs in the United States is more competitive than otherwise. Outsourcing has resulted in increasing unemployment problem in America. While those who are in favor of outsourcing argue that as a result of outsourcing, high-value jobs will be created to substituting jobs lost by outsourcing, the facts reveal quite different situation in future. Projections made by the Bureau of Labor Statistics in 2004 have clearly said that outsourcing can only increase unemployment. According to a CNN commentator Lou Dobbs, among the top-ten projected areas of job growth only three categories require a college degree. He also interprets that those who take new jobs will provide only 80 percent of their former pay rate. Some of the statistical data reveal the following facts. Unemployment among America's engineers has sharply increased from 2.0% in 2001 to 4.2% in 2002 to more than 6.0% in the first quarter of 2003. The unemployment problem is even worse for people belonging who have the basic degree in electrical, electronics, computer and software engineers. According to the Bureau of Labor Statistics at the U.S. Department of Labor, unemployment among electrical and electronics engineers reached 7.0% in the first quarter of 2003. 6.5% of all computer hardware engineers and 7.5% of computer software engineers were also unemployed during the same period. It is also evidenced that outsourcing has negative consequences for the overall American economy. Even though free trade is often cited as a reason for outsourcing, Dobbs suspects that eminent economists such as Adam Smith and David Ricardo, who regularly advocated free trade, would take a different opinion if they realized that