Benefits of Outsourcing U.S. Jobs

Benefits of Outsourcing U.S. Jobs

When a customer calls a toll-free customer service telephone number, it is possible that the call will be routed to a foreign country such as India or Argentina. A technician in that country trained by the American company to answer questions will solve the customer’s problem, often within a few minutes, and the customer will typically not have any idea where the call center is located. Increasingly, American companies are taking advantage of highly educated labor pools outside the United States where wages can be one-tenth of what these companies would pay employees within the United States. In many cases, jobs are transferred overseas with the result that American workers are put out of work. In other cases, jobs are simply created in the foreign country which limits job creation in the United States. Media coverage tends to focus on those American workers who are put out of work, but there are some economic analysts who maintain that relocating jobs overseas will result in more and better jobs domestically. This research considers that argument.

When most Americans hear about outsourcing jobs overseas, they typically associate the move with laid-off workers locally and a boon to the destination country’s economy. Such impressions are reinforced by the story of Sykes Enterprises, which opened two call centers in Kentucky after receiving several million dollars in incentives, and which then closed the call centers after only a few years, relocating the jobs to India (Morse A1).

While outsourcing of manufacturing and production jobs has occurred for many years, much of the anger about outsourcing has come about as traditionally white-collar jobs are relocated. These jobs, often held by college-educated younger workers, in the service industries are now being relocated to foreign countries and the workers are understandably upset. By one estimate, more than 3.3 million jobsùincluding many in the service sectorùwill have…

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