Finak Research Paper

Outsourcing Jobs

Ashford University

GEN499: General Education Capstone (GSV1617B)

Instructor:  Susan Luck

Leticia Cordero

May 9, 2016

Introduction

Outsourcing is when an institution decides to contract some functions to companies that specialize in that particular area. For example, companies in developed countries have outsourced their IT functions to India because of cheap labor and efficient service. Issues and controversies have been raised about the potential negative effects of international outsourcing because it is taking jobs out of the economy. Job security and wage rates are some of the factors that professionals believe have been influenced by the outsourcing of jobs. The impact of outsourcing jobs on the less skilled workers is very serious. Most of the less skilled employees are likely to remain jobless when the employer decides to outsource the jobs abroad. It is also true that outsourcing is responsible for the high rate of economic growth that has been recorded in India. China, Singapore, and Sri Lanka are the other countries that have heavily benefited from outsourcing. A great deal of debate still surrounds outsourcing all over the world.

Thesis Statement: Outsourcing is beneficial to the employer because it aids in saving costs and getting companies that deliver efficient services, however, it has a negative effect on job stability and employment.

Annotated Bibliography

Anner, M. (2011). The Impact of International Outsourcing on Unionization and Wages: Evidence from the Apparel Export Sector in Central America. Industrial & Labor Relations Review, 64(2), 305-322.

The author argues against the assumption that workers in the developing countries benefit from the jobs outsourced from the developed countries. Anner (2011) believes outsourcing jobs from developed countries has resulted in low unionization and declining wage rates. The author uses evidence from Honduras, and El Salvador shows how wage outsourcing has negatively affected the job industry. First, labor strikes have reduced because workers are geographically dispersed. Second, plant level investments have reduced, which means plant mobility is low. Third, the cost of labor is high in relation to the total costs, which explains why employers offer low wage rates. It is clear that the outsourcing is not the savior in developing countries as most people believe.

The resource will provide the evidence needed to support the claim that outsourcing has a negative impact on job stability and wage rates.

Dolgui, A., & Proth, J.-M. (2013). Outsourcing: Definition and Analysis. International Journal of Production Research, 51(23-24), 6769-6777.

Dolgui and Proth (2013) analyze the concept of outsourcing starting from the origin of the vocabulary. They provide a concise analysis of the term outsourcing and its meaning the global context. The paper traced the source of the outsourcing to the early 2000s when firms realized the benefits of moving functions abroad to lower the cost of production. The authors – who are business professionals – provide the benefits and limitations that come with outsourcing. A thorough analysis that gives clear information about how different people feel about the outsourcing. It outlines the effects of outsourcing over the medium and long terms. The purpose is to show all the possible results that a firm should expect if it decides to adopt outsourcing.

This resource will help in providing a comprehensive background analysis on outsourcing and its effects. It will help giving the research paper a strong foundation. The information will also help in explaining the effects that outsourcing has on job stability and wage rates.

Kuang-Chung, H., & Yungho, W. (2014). International Outsourcing, Labor Unions, and Job Stability: Evidence from U.S Manufacturing in the 1980s. (2014). Journal of Applied Economics and Business Research, 4(4), 210-234.

The authors focus on analyzing the impact of international outsourcing on labor unions and jobs stability. In response to several questions that have been raised concerning the effect on outsourcing in the 1980s and the impact it had on the job industry, the authors conduct a deep analysis founded on critical literature review. The evidence used to support the claims made by the author is from the behavior of the U.S manufacturing in the 1980s. How does international outsourcing and labor unions interact to influence the rates of job retention? According to the paper, international outsourcing reduces job retention rates for blue collar jobs. Unions have helped in mitigating the risks associated with the reduced job retention rates. White color retention rates have remained high because of increased focus on research and development programs.

This resource provides the information needed to show the interaction between labor unions and outsourcing. It will also aid in supporting the claim that outsourcing jobs lead to lower job retention rates.

Pyzik, K., & Mar, S. (2012). The Pros and Cons of Outsourcing. Internal Auditor, 69(2), 21-23.

The authors focus on the outsourcing of audit activities. According to Pyzik and Mar (2012), outsourcing offers many benefits to the internal audit departments because it reduces the workload. Outsourcing some of the non-core auditing functions gives the IT and Internal Audit departments time to focus on system development and other core functions. The non-core functions can be done efficiently at a relatively lower cost. The authors also outline the limitations of outsourcing auditing functions. Outsourcing of all IT related auditing functions can cause panic among employers in the IT department who might be scared of losing their jobs. There is always the possibility of delays and low-quality work. Understanding the pros and cons of outsourcing makes it easy to make quality decisions.

The resource will help in showing that two sides of outsourcing. Outsourcing has its advantages and disadvantages. The resource provides the evidence needed to show that outsourcing can cause discord in an organization.

Shao, B. B., & David, J. S. (2007). The Impact of Offshore Outsourcing on IT Workers in Developed Countries. Communications of the ACM, 50(2), 89-94.

The authors discuss the impact of outsourcing on IT workers in developed countries like the United Kingdom, Germany, and the United States. The paper was written at a time when IT outsourcing was on the rise. Many government agencies, unions and workers were worried about the impact that outsourcing will have on the economy of developed countries. What happens to the employees who are left without jobs when a company decides to outsource some of its functions? The clear benefits of outsourcing are experienced by the employer who gets to save. The government loses tax, and the employee loses a job. The study confirms that offshore outsourcing leads to the loss of jobs and it negatively affects the economy of developed countries.

The resource has the evidenced needed to support the claim that outsourcing is not good for developed countries. It hurts economic growth and development in developed countries.