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March 14, 2022

6 Ways Outsourcing Affects the US Economy

Outsourcing has been around for decades. For much of that time, there has been a lot of controversy about the effects outsourcing has on the US economy. A lot of the talk on the topic has been negative, and some believe outsourcing is not good for the US. But is that the truth? 

Does outsourcing take jobs away from Americans? Does sending off work add to the US unemployment rate? Let’s go over everything to see the different ways outsourcing affects the US economy. You might be surprised by the benefits outsourcing really does have on our nation. 

Why Outsource Offshore 

So what’s all the hype around outsourcing? Why would a company hire a business offshore to complete work? The short answer is there are fantastic benefits that help US businesses become more profitable, efficient, and successful. US companies outsourcing provides benefits to foreign countries and US economies.

Companies outsource when the work can get done better elsewhere than in-office. The cost of living in many countries is extremely low compared to the US. So, companies there have lower overhead expenses, and people are willing to work for less than in the US. A business can hire the skill level they need for a fraction of the cost.

Here are a few benefits of outsourcing:

  • Lower cost
  • Increase productivity
  • Improve efficiency
  • Access to a higher skillset
  • Save time

Ways Outsourcing Affects the US Economy

Outsourcing offers many advantages for US businesses. The argument for many is that offshore outsourcing adds to the unemployment rate in the US. If we take the number of jobs outsourced and give them to the unemployed, all Americans would have work. 

However, with all the help wanted signs in the windows of US businesses and companies begging for workers, the issue probably is not because of outsourcing. US workers expect higher pay and choose which types of jobs they take.

Keep in mind the jobs outsourced are often lower pay. If businesses in the US paid Americans the same pay to do the work, the poverty level would dramatically increase. The cost of living is higher in the US than in the top outsourcing countries, so Americans need to make more money to make ends meet.

Here’s how outsourcing affects the US Economy:

1. Keeps US Businesses Open

Operating a business is costly and leaves many CEOs and entrepreneurs looking to cut costs. Without outsourcing, business expenses would increase, leaving US companies to raise their prices. The higher fees would result in American companies losing business to foreign competitors with lower rates.

The truth is, foreign competitors can put many US companies out of business if more American consumers choose them to save money. Startups, especially who’s cash flow is tight, decide to outsource for the competitive advantage it brings.

Outsourcing helps American business owners dream of business success get their business essentials completed while not breaking the bank. It allows them to offer their goods and services for a competitive price. 

So, outsourcing lets US companies get a piece of the market share without much business loss to lower-cost competitors overseas.

2. Reduces Cost of Goods for Americans

Companies save money with outsourcing and pass the savings on to their customers by offering competitively priced products and services. By outsourcing, Americans have access to affordable goods purchased directly from US companies. The money US consumers save can go back into circulation to boost the economy.

When American companies stop being competitive, there will be a huge shift in where US consumers do business. The US must remain competitive to keep the revenue flowing.

Outsourcing also benefits the US economy by consumers and businesses acquiring goods from foreign countries at a lower cost. By keeping prices competitive and maintaining high-quality goods, the demand and sales of the products increases.

3. Occupational Employment Changes

Outsourcing has brought on other, higher-earning occupations rather than US workers taking on lower pay jobs. The advanced technologies from outsourcing create new positions for Americans that offer opportunities that wouldn’t otherwise be available. These positions offer higher pay than a lot of the jobs outsourced.

Companies like Apple, Nike, and IBM have all adopted outsourcing models to get their work done for less money. The benefit is these products have created jobs for American workers. So the companies win by lowering costs, US workers get jobs, and other countries gain revenue to help their people put food on the table.

4. Higher Pay

Companies that outsource save money, improve efficiency and increase productivity. Many US companies pay their employees more than the average with lower overhead expenses since outsourcing improves their bottom line.

So, American business owners are more profitable and can take better care of their employees. Sharp US company leaders know the importance of employee happiness and offer higher pay when the profits increase. Higher incomes for US workers help build a more robust economy.

5. Global Market

Outsourcing also has the benefit of helping other countries out of tough economies and stimulating economic growth abroad. It allows less-developed nations to improve their standard of living and thrive. But, it also enables them to be part of the global market and buy exports from the US.

Several countries have built their economies from outsourcing and greatly rely on the global market. Outsourcing helps boost financial stability for countries, and America benefits from its investments in US exports. It’s a win-win situation.

For sure, the US heavily relies on imports and must remain part of the global market to continue doing business with foreign countries. To offset the loss of revenue from imports, the US must export goods to other countries as it cannot rely on sales from the nation alone.

6. Innovation

Americans are excellent innovators and great at creating businesses. By outsourcing, company leaders can create their next project while their outsourcing provider completes specific work for them.

Company leaders are often bogged down with the workload because they don’t have the time to focus and strategically plan growth. Outsourcing mundane and tedious tasks give business leaders the extra time to think up their plan for higher success.

Outsourcing allows businesses to advance their offerings and scale. Many US companies have taken their business to the next level after outsourcing. Companies like Apple, based out of California, have their electronics assembled in China.

Top U.S. Jobs Outsourced

Truthfully, every business function can get outsourced successfully. Some companies pass off most of their business functions to an outsourcing provider and others only a few tasks. Some jobs are more beneficial to outsource than others.

There are hundreds of thousands of jobs outsourced by the US annually. Here are the top jobs outsourced: 

Call Centers

Inbound and outbound call centers are often outsourced to providers overseas who specialize in phone work and servicing customers. Operating a phone room requires a lot of employees, technology, equipment, and time. 

To save US businesses time and money, company leaders pass off this function to the pros set up and experienced in handling this essential function.

Manufacturing

US business leaders and entrepreneurs with a product idea often write the plans for the goods, how they will function, and their features. When the plan is finalized, they outsource the product’s manufacturing to providers overseas who have the equipment in place and can get the job done effectively for less money.

Information Technology

Staying up-to-date with technology is expensive but essential for running smoothly. Many company leaders outsource their IT functions to gain access to top-of-the-line technology and experts in the industry for a fraction of the cost if they kept it in the US. Managed service providers overseas work around the clock to keep businesses safe.

Marketing

Businesses cannot survive without effective marketing. Handling the marketing for a business is a full-time job that requires a lot of time and strategic thinking. Many companies outsource their marketing efforts to a third-party provider with the skills and expertise to take their business soring. Marketing also involves the design, content creation, and advertising. 

Conclusion

Outsourcing increases everyone’s income and helps US businesses reduce costs and grow. If outsourcing went away, it would cause the US to become less competitive against other nations. Companies outsource jobs for the benefit of lowering expenses and competing in the global market.

Let’s face it, the cost of living in the US is high compared to many other nations. Americans need a higher income, and taking a job to put them at the poverty level is out of the question for most. So, outsourcing helps businesses, countries, and individuals increase cash flow. 

Are you ready to enjoy the benefits of outsourcing? Contact Awesome OS today. Let’s talk.

 

Sources:

Current Population Survey (CPS) | BLS

Top Seven Tasks To Outsource Now | Forbes 

Since 2017, Hundreds of Thousands of American Jobs Were Offshored, Trade Deficit Is Up 22% | Public Citizen

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