How Outsourcing Benefits Business and the Economy But Not Necessarily Individuals

Outsourcing does cause job losses, and can contribute to lower consumer spending but it can make corporations wealthier. Over the long run, wealthy corporations are advantageous to the economy especially if that wealth is used to grow businesses and increase employment.

For people who lose jobs it's difficult to rationalize the personal implications of being part of a greater economic formula that theoretically benefits the population at large. For businesses, outsourcing often has many benefits that assist in meeting corporate goals, shareholder expectations and economic objectives.

To not outsource would be riskier than outsourcing and the benefits of outsourcing outweigh any disadvantages if accounted for properly. In the long term outsourcing provides corporate, community and economic cures that would be a missed opportunity had outsourcing never taken place. Below are a few of the benefits enjoyed by companies that successfully outsource.

• Lower employment related costs
• Increased revenue
• More investment capital
• Creation and/or maintenance of more specialized jobs
• Improved competitiveness
• Outsourcing reduces the need for office space in pricier real estate markets lowering overhead costs.

The negative impacts of not outsourcing

Companies outsource to exist in a competitive world with the hope of getting an edge. If they didn't outsource they could potentially face lower profit margins, decreased equity capitalization, reduced advertising, marketing and research budgets in the short term alone. In the long term a chronic decrease in profit, equity, leveraging and operating budgets could lead to decreased market share, higher financing interest rates, even more decreases in profit and budgets and then possible downsizing, take over or bankruptcy.

Social consequences of outsourcing do not outweigh the benefits

While outsourcing may not be considered ethical or valuable to a community of workers the benefits outweigh the costs at both the corporate and macro-economic levels. The corporate advantages are outlined above and the economic benefits include the following:

• Potential for higher Gross Domestic Product (GDP)
• Increased financial leveraging both domestically and internationally
• Improved chances of economy improving innovations across various industries
• Possible increased market share and/or reduce market share loss
• Greater global market positioning in terms of GDP can lead to
• Sustained and/or improved confidence in national currency

It is evident outsourcing not only advances corporate goals but also national goals. While it is true that not everyone benefits from downsizing the advantages to a nation outweigh the costs. Laid off workers who retrain have a greater chance of improving their financial situations and in the long run a more specialized and skilled workforce can emerge in part from the effects of outsourcing. This more skilled and specialized workforce can be advantageous both at the community level, corporate level and national level in terms of know how, income potential and standard of living.

Outsourcing is more likely to be a cure for corporate ailments than a problem. The advantages can be seen across more than corporate balance sheets and income statements, but also in society, national economic performance in addition to corporate bottom lines. There a few negative short term impacts on local communities of workers, but in the long run, the advantages do outweigh the costs, and future generations may be thankful that outsourcing has taken place.