Outsourcing in the U.S. Essay

1968 WordsNov 26, 20138 Pages
Outsourcing in the U.S Outsourcing can technically be defined as “A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally”(Investopedia) , but is not limited to that definition. Throughout history many firms in the U.S. have used outsourcing for many different reasons other than cheap labor, which is what people always assume when hearing the word outsourcing. I will be discussing various topics that are related to outsourcing in the U.S., that include the pros and cons, why firms practice it, what effects it has on the firms and the country or place they are outsourcing to, how it has changed over the years with technology, and some examples of it happening in today’s world economy. When used properly outsourcing can be a very cost effective strategy when conducting business or manufacturing a product. It can sometimes be more affordable to purchase or use a countries resource or services that have a comparative advantage in doing those specific things. It is not always good for a company to try and do every task themselves when another firm or person can do it better for much cheaper than they could possibly every do the task at hand. This is why so many companies turn to outsourcing as a way to save money and cut costs that would otherwise cause the company trouble and frustration. Outsourcing was not actually identified as that until around 1989 or so, but the concept and way of business had been going on in the U.S. for a long time before that. A business model for most of the 20th century was a large brick and motor company that can own, manage, and control its assets all under one company. In the 1950s and 1960s diversification was the objective of most firms and to take advantage of economies of scale. By making themselves diverse, companies expected to protect

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