An Argument for Outsourcing: Finding the Right Economy for Your Business
A topic of political debate that often arises in the United States is the outsourcing of American businesses to foreign countries. Some argue that American businesses need to stay in the U.S. in order to avoid taking jobs away from hard working Americans and keep revenue within national borders, while the opposing side argues that outsourcing is, in many cases, more cost-effective and it only makes sense to go where the opportunities are. While there is an argument to be made for both sides, I am of the opinion that, as the world becomes more globalized, a business needs to look at moving their operations from the perspective of finding the right economy that makes the most financial sense.
If you do a quick internet search, you will find that there tend to be more arguments for offshore outsourcing than against it. Many U.S. financial and technology companies are realizing the benefits of moving their companies, or at least certain divisions of their business, offshore. Here are a few arguments in favor of outsourcing to help any business owner to determine if the time is right to move operations across borders.
Economy of scale
The economy of scale in the United States is not what it used to be. Many companies are starting to realize that they are not getting the return on investment they should be after funneling money into increased levels of production. As the world becomes more global in scope, the regional economy’s impact is reduced over time. Additionally, one of the negative side effects of increased technology and sophistication throughout the world is that as many economies become more leveled and competitive, businesses need to look to more places that are economically inferior.
Another argument for offshore outsourcing is that, in many instances, it just makes economic sense to do so. As much as some people may want to keep jobs in the U.S., you can’t force it. A business owner must find the right economy in which to grow their business and go where it makes the most sense.
In a survey of business owners from The San Diego Union-Tribune asking the question, “Should the U.S. punish offshore outsourcing?” every participant answered no. According to Phil Blair, the CEO and owner of Manpower San Diego, “Free enterprise is the key to America’s success and growth over many decades.” U.S. companies are forced to compete on a global stage for the top talent, venture capital, and in-production costs. Therefore, they should not be penalized for producing their products in the most economically efficient way possible.