Why is outsourcing important in today's society?

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booboosmoosh | High School Teacher | (Level 3) Educator Emeritus

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Outsourcing is something that has a great impact on the American economy.

Technically, outsourcing can take place on several levels. On the most basis level, a company that outsources will have another company manufacture materials it needs rather than doing so on their own. It can be successful for the business if it outsources to a group that can provide materials more cheaply that the initial company. In this way, costs can be cut. Common kinds of outsourcing include...

...manufacturing of components, computer programming services...accounting functions, training administration... transportation of products...

This kind of strategy has not always be the way a company did business. Before the mid-1980s, companies would buy out other companies that could preform functions they needed, but this was not always a viable or profitable.

Outsourcing can also be accomplished by sending work to foreign countries so that manufacturing or costs for services are done much more cheaply than can be done in the United States. Motivation for this is...

...based on realizing gains in business profitability and efficiency.

However, the downside for the economy of this kind of action is that when manufacturing or service needs are fulfilled outside the US, jobs are lost because they work is being accomplished by workers in other places. This increases unemployment. In addition, sometimes the products or services produced are of a much lower quality.

Initially outsourcing may seem to be a good idea, but ultimately, it is not good for the economy or is often bad in terms of the quality of goods and services being "purchased."

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