Should Outsourcing in the US be Regulated?

The success of every nation’s economy is dependent on said nation’s supply of goods. This brings up the question: how can supply stay high for millions of products while maintaining a reasonable price for consumers? This question involves many factors, but one of the crucial reasons that businesses in the US often offer very affordable prices to consumers is the government's lack of regulation on outsourcing. Outsourcing allows for another nation's workforce to produce goods for a company, speeding up production rates while allowing the company to focus on its other core business activities. The benefits of outsourcing the production of goods is crucial to the economy of the US and other countries; every negative is outweighed by a positive when the government does not regulate outsourcing.

The ability for companies to outsource their goods allows for otherwise unachievable efficiency.  A company's leaders are traditionally best at developing business and product ideas for their respective markets; it is ideal to allow these individuals to focus on this rather than on the production of goods. Along with business leaders having less to worry about, these leaders can now hire employees who can focus on doing what they’re best at, rather than on tedious labor. With outsourcing unregulated, a company can pick an outsourcing company that specializes in the production of the goods that are needed. This will allow for more efficient production than if the goods were produced internally, and in turn, the supply for the goods will go up. The effect of efficiency created by outsourcing is truly relevant, as the ITAA released a study that estimated that 317,000 U.S jobs will be created as a result of the efficiencies of offshore outsourcing. If done correctly, outsourcing allows companies to work together as a team, each specializing in different parts of the business, enabling optimal efficiency. 

Outsourcing isn’t only beneficial to the supply of a product available, but it is actually in the best interest of consumers as well as producers, reducing costs for both parties. Due to the services of outsourcing companies costing less money than the amount needed for a business company to produce goods internally, producer’s costs are lowered. To support this, an article by Harvard business review explained that when wanting to cut 20-30% of the costs of a business, outsourcing is recommended. On top of the goods costing less to produce, there is also a greater supply due to the outsourcing companies’ specialization in the production of said goods. This increased supply and reduced costs for producers will result in a cheaper price of the goods for consumers, as producers have more units of the product for sale. This chain reaction, caused by no regulation of outsourcing, is beneficial to both producers and consumers in the market.

The “crucial to economy” benefits of outsourcing are often argued against using a claim which asserts that outsourcing companies mistreat and underpay foreign workers. This statement, however, does not fully capture the reality of the situation for most workers in outsourcing companies. The first opposing fact to this statement is that not all outsourcing is done outside of the US, so the minimum wage and working conditions are of course regulated for this group of workers. For workers outside of the US, the vast majority of them willingly take the job opportunities. This means that despite the poor working conditions that may be given, the workers have the option to quit at any time. On top of this, the job that the outsourcing company offers may be the best option that a worker has in their country. This best option may be a low wage, but it can increase over time due to high demand from workers. Humanitarian issues must be acknowledged, but they shouldn’t impede the notable benefits of outsourcing which are providing thousands of jobs and benefitting the economy. Outsourcing essentially allows laborers to find work that they would not be able to obtain previously, as well as allowing the demand of greater conditions and pay over time. Another concern about this topic is that because of the outsourcing that is occurring offshore, jobs are being lost in the US. However, according to a study released by the Information Technology Association of America, 104,000 U.S software and service jobs were moved offshore, while 90,000 more were created within the US. This means that there was not a very devastating loss of jobs in the US, plus more jobs were created in other countries. Overall, when considered in conjunction with the massive economic benefits, the benefits that workers gain from outsourcing are substantial. 

The idea of outsourcing has been a hotly debated topic due to the concerns of working conditions, but the economy is absolutely dependent on this form of production, plus the working conditions are not as malicious as they seem. Workers have the option to partake in this work, and for a lot of them, this work is the best option. These workers provide a specialization in production for the company which would not exist if the goods were not outsourced. This causes outsourcing to lower costs and increase efficiency for every party in the market for the product. This leaves the conclusion that outsourcing must be continued and does not need to be regulated by the government. It is unknown just how many negative effects the regulation of outsourcing by the government would have on the economy, but it is in no one’s best interest to find out.

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