The drawbacks of outsourcing work to foreign countries.
According to a report put out by the Bureau of Economic Analysis, the median income in 1969 was equal to $33,072. Almost thirty years later, that figure stood at $35,172. In twenty years time, incomes have only risen approximately $2,000. Given the much higher cost of living, this report shows how we are working harder to earn less. The rising cost of fuel, cars, heating, electricity, the advent of cable and the Internet, all play a large part in the difference in costs of living. It is no wonder that more couples are forced to work and the day of the stay-at-home parent is coming to an end.
Today, the average unemployment rate stands at 4 ½%. Alaska, Michigan, and South Carolina have the highest unemployment rates, each set at more than 6%. One of the largest contributors to the national unemployment rate is outsourcing work to foreign countries.
According to Goldman Sachs, between 300,000 to 500,000 jobs have been lost to date. The company estimates that this will lead to a loss of 6 million jobs over the next ten years. With 140 jobs located in the United States, this may not seem like a lot, but it would be similar to eliminating every job in Arizona. That is a significant number of jobs to be eliminated.
Most of the outsourced jobs are in these related fields:
- Business Applications
- Communication Services
- Data Operations
- Help Desks
- IT Infrastructure
- IT Security
- PC Management
- Specialized Manufacturing
Many companies are outsourcing jobs to other countries. A small list follows.
- Cisco Systems
- General Electric
- IndyMac Bancorp
- Marriott Hotels
- Proctor & Gamble
Low labor, production, and energy costs in many countries including China, Japan, India, and Mexico is causing companies to shut their factories within the United States and open new factories in foreign countries. This leads to the loss of jobs within the United States, a lower standard of quality, and resentment by those who are living within the United States and are sick of seeing jobs go overseas.
In 1994, NAFTA (North American Free Trade Agreement) was passed by then President Bill Clinton. His goal was to open the trade routes to all countries. Unfortunately, it led to many plants moving across the borders to Canada and Mexico. While outsourcing had begun in the 1980s, it grew by leaps and bounds in the latter part of the 1990s. Jobs went overseas to China, Japan, and India and the economy began to falter as American’s lost their jobs and suddenly faced living on minimum wage as higher paying jobs went to these other countries.
Look at the average annual salaries in these other countries, and it is easy to understand why companies find it appealing to outsource their business. Especially in China where the average yearly salary is pathetic.
- China – $1,290
- India – $14,500
- Japan – $17,000 to $50,000 (Depends on the region)
- Mexico – $9,000 to $16,000 (Depends on the region)
Outsourcing U.S. jobs to these areas are allowing many formerly poor areas to increase their standard of living. Meanwhile, it is taking away from many families in the United States.
Outsourcing jobs to foreign countries can impede customer relations. Thick foreign accents can make it hard for customers to understand what the call center employees are saying. This can lead to frustration and drive customers away to other corporations who use operators and sales staff who speak clear, accent-free English.
This is only part of the danger. In 2005, Citibank announced it had been using Indian call centers to outsource some of its workload. The workers in this call center used the access to American accounts to embezzle money from customer accounts. As it turned out, a worker in the United States holds a social security number that can be used for background checks. Outsourcing business to foreign companies eliminates the possibly for completing background checks. This makes it easy for the foreign workers to steal important account information.
Unfortunately, companies are not going to stop outsourcing work until Americans stand up and fight. Write to your local politicians, your federal government, and make yourself heard. Start boycotting companies who do outsource their business to foreign countries. To fight outsourcing, it is going to be up to those at risk of losing their jobs.