Background
What is offshore outsourcing?
Offshore outsourcing is when a company negotiates a contract with a third party in a foreign country to perform a particular business function, whether that be providing information technology, accounting, or even legal services.
What are some real-world examples of the outsourcing issue?
There is a multitude of news stories available detailing the horrors of outsourcing for the American public. Take a look at the recent march and rally held in Oakland in September by Kaiser workers who were protesting planned job cuts by the healthcare giant. These workers were obviously not pleased to hear news that Kaiser will be moving certain business processes abroad to lower costs.
Despite these protests, some corporations insist on outsourcing certain business functions to secure greater profits for their bottom line. AT&T, for instance, is earning record profits and is expecting an estimated increase of $20 billion in savings from Trump tax reforms, but it has continued to lay off workers and outsource jobs. While it may seem illogical to continue outsourcing despite earning record profits, AT&T executives may be considering the increased efficiency that outsourcing offers rather than the mere financial incentives.
Why do corporations participate in outsourcing?
For corporations, outsourcing can save costs by contracting third parties to accomplish the same task for less money. Outsourcing may also increase efficiency by entrusting business functions to contractors that specialize in those areas. Due to the increased savings and time, outsourcing also enables companies to focus on their core competencies, or the business processes that they are best at.