Americas Losses And Gains In Offshoring

Americas Losses And Gains In Offshoring 1running Head Americas

Americas Losses and Gains in Offshoring 1running Head Americas

America’s Losses and Gains in Offshoring

Sean D. Smith Webster University Literature Review Offshoring or Offshore outsourcing has been defined as the migration of jobs to poor countries from rich countries, leaving the people who perform them behind. (Blinder, 2006). It is a term that became common only recently to describe the practice of companies from developed countries of contracting with businesses beyond their country borders for services that would have been done by in-house employees (Levine, 2012). According to Byrne (2010), between 2000 and 2009, the U.S. shed some 5.38 million manufacturing jobs and 2.4 million of these were attributed to the trade deficit with China, according to the data of the Commerce Department.

The forecasts for job loss are frightful, according to some quarters. A report submitted to the Congressional Research Service prepared for members and committees of Congress entitled Offshoring (or Offshore Outsourcing) and Job Loss among U.S. Workers (Levine, 2012) will be the foundation of this paper. The recent developments of offshoring previously limited to manufacturing has expanded to service providers and resulted in heightened concerns about public policy in the U.S. (Cline, 2012; Roberts, 2010) due to the extent of job losses and the lack of existing programs so unemployed US workers can adjust to the changing mix of jobs. The Economist (2013) printed a report entitled “Home or abroad? Herd Instinct†discussing the growth of outsourcing contracts entered into by European and American firms. The report included a short list of companies who outsourced their production to what country and why. Graebel Companies Inc. (2012), published the results of their own research on global mobility projections for the next 10 years. Norman Matloff (2005) wrote about what can go wrong about offshoring published in IT Pro: Perspectives. Raul Sood (n.d.) discusses security threats offshore and areas that American companies need to protect when using offshore labor.

Another article written by Aron and Singh (2005) discusses identifying and managing offshoring risks and evaluating its operational and structural risks to make it right. Suzy Khimm (2012) in The Washington Post reports about the results published in a new paper from the London School of Economics Center for Economics Performance where 3 economists examined fifty eight U.S. manufacturing companies from year 2000 to 2007 and found that offshoring tends to increase productivity and reduce costs. In April of 2013, Matthew Davis wrote a report for The National Bureau of Economic Research that “Service Offshoring Raises U.S. Productivity†based on a similar report written by Amity and Shang-Jin (2006) that service offshoring accounting for around 11% of U.S. productivity growth in manufacturing industries from compared to the 3% to 6% gain attributable to imported material inputs.

David (2013), the Chief revenue officer and co-founder of Kultura came out with another article published in the Huffington Post about the US employment debate. Lewin & Peeters (2006) said that many companies resorted to offshoring because of stiff competition, so they needed cost cutting strategies. The authors presented an exhibit of the short history of offshoring at General Electric from 1990 to 2004 and conducted a survey of 650 US Forbes Global 2000 companies. This view was reinforced by John T. Chambers Jr. in “Offshore: Skirting U.S. taxes†that appeared as an editorial in The Charleston Gazette (2013).

Chambers is CEO of Cisco, an international electronics giant. Thurm & Linebaugh (2013) of The Wall Street Journal presented their analysis of 60 big U.S. companies who sent $166 billion offshore in 2012. The strategy resulted in shielding more than 40% of their profits for the year from U.S. taxes. In 2009, Pricewaterhouse Coopers LLP published “Foreign Filings: Navigating International Tax†as part of Growing Your Business reiterating that “Efficient global operations require an understanding of international taxes as well as an awareness of legislative changes proposed by the Obama Administration.†The publication contains a comparison of corporate and individual tax rates of 38 countries worldwide.

On June 26, 2012, the Internal Revenue Service posted in their Frequently Asked Questions and Answers the details of their “Offshore Voluntary Disclosure Program.†The Annenberg Public Policy Center (Gore, 2012) also published Talking Tax Breaks for Offshoring. Offshoring as an ethical issue was discussed by Robert A. Chultz in his book (2006) and by Friedman, 2005. In 2008, the German Bishops’ Conference Research Group on the Universal Task of the Church published a study on “World Economy and Social Ethics.†Amanda Rose (2007) discussed how ethics, morals, values and standards have become more complex, particularly affecting HR decisions of multinational companies. The data on mass layoff due to outsourcing and offshoring work (Brown & Siegel, 2005) has been published on Monthly Labor Review Online by the Bureau of Labor Statistics.

Another relevant report has been written about Trade Offshoring and U.S. Multinational Employment in the Manufacturing Employment in the United States, (Salem, Bloodgood, Wohl & Jabara, 2011). Trade in Tasks (Lanz Miroudot & Nordas, 2012) and Trends and Impacts of Offshoring and Employment (Organisation for Economic Co-operation and Development, 2006) can be found at the OECD website According to Dr, Paul Craig Roberts (April 18, 2010), only a handful of people have objectively looked at the outsourcing issue, which includes Americans whose careers were destroyed by outsourcing. The author discusses Outsourcing America, a new book published by the American Management Association written by brothers Ron and Anil Hira (2005).

According to a study conducted by the University of California, there are 14 million white-collar jobs that are vulnerable to outsourcing. The authors call these vulnerable jobs the jobs of the American Dream. The book shows how outsourcing is affecting America in a bad way. This work will try to understand the motivations of organizations in offshoring their operations, thus depriving many Americans of job opportunities at home. Similarly, incentives that should be given to new businesses will be analyzed, together with incentives that Asian countries are offering to multinational companies so they will choose to outsource.

The question is between ethical considerations and profits that is gained from low wages offshore and greater productivity, as well as lower tax rates and ease of doing business. References Amiti, M. & Wei, S. (2006) Service offshoring and productivity: Evidence from the United States. The World Economy . Blackwell Publishing 32(2). Aron, R. & Singh, J. V. (2005). Getting offshoring right. Harvard Business Review. Toolkit . Retrieved from AronSingh.pdf Blinder, A. (2006). Offshoring: the next industrial revolution. Foreign Affairs . Retrieved from Byrne, J. A. (2010). Out-source of pain: US companies moving jobs offshore at record pace. New York Post . Retrieved from out_source_of_pain_AdkCRvpScy5WLN2Sc96rUK Chambers Jr., J. T. (2013). Offshore: Skirting U.S. taxes. The Charleston Gazette . Retrieved from Cline, Andrew. (2012). Column: Offshoring jobs, the American way. USA Today News . Retrieved from David, S. (2013). The US Employment Debate: Offshore or Onshore? Huffington Post . Retrieved from debate_b_.html Davis, M. (2013). Service Offshoring Raises U.S. productivity. The National Bureau of Economic Research . Retrieved from Friedman, W. H. (2005). An economic and ethical analysis of offshoring: intercountry outsourcing of IT Employment . PA: Idea Group Publishing. German Bishops’ Conference Research Group. (2008). Relocation of jobs: development opportunities and human dignity, socio-ethical considerations. A study by the Group of Experts on “World Economy and Social Ethics.†Bonn. Gore, D. (2012). Talking tax breaks for offshoring. Fact Check.org: A Project of the Annenberg Public Policy Center . Retrieved from breaks-for-offshoring/ Graebel Companies Inc. (2012). Offshoring? Reshoring? Nearshoring? How will global mobility change in the next 10 years? Graebel: Peace of mind. Worldwide . Retrieved from Hira, R. & Hira, A. (2005). Outsourcing America: What’s behind our national crisis and how we can reclaim American Jobs . Amacom. Home or abroad? Herd instinct. (2013). Companies need to think more carefully about how they offshore and outsource. The Economist . Retrieved from news/ special-report/-companies-need-think-more-carefully-about-how-they- offshore-and-outsource-herd-instinct Internal Revenue Service. (2012). Offshore Voluntary Disclosure Program: Frequently Asked Questions and Answers. Retrieved from Taxpayers/Offshore-Voluntary-Disclosure-Program-Frequently-Asked-Questions-and- Answers Khimm, S. (2012). Offshoring creates as many U.S. jobs as it kills, study says. The Washington Post . Retrieved from study-offshoring-creates-as-many-u-s-jobs-as-it-kills/ Lanz, R., Miroudot, S. & Nordas, H. K. (2012). Special Section, Chapter 7. Trade in Tasks . Organisation for Economic Co-operation and Development. Levine, L. (2012). Offshoring (or Offshore Outsourcing) and job loss among U.S. workers. Congressional Research Service. Lewin, A. Y. & Peeters, C. (2006). Offshoring Work: Business hype or the onset of fundamental transformation . Long Range Planning: Elsevier LP Journal. Retrieved from ng_business_hype_or_transformation.pdf Matloff, N. (2005). Offshoring: What can go wrong? IT Pro: Perspectives . IEEE Computer Society. Organisation for Economic Cooperation and Development. (2006). Offshoring and Employment: Trends and Impacts . OECD: Better Policies for Better Lives. Retrieved from Price Waterhouse Coopers LLP. (2009). Foreign filings: navigating international tax. Growing Your Business Volume 60 . Retrieved from services/pdf/gyb_vol_60_foreign_filings.pdf Roberts, P. C. (2010). The offshore outsourcing of American Jobs: a greater threat than terrorism . Creators Syndicate and Global Research Rose, A. (2007). Ethics in the business environment . McGraw-Hill Highered. Retrieved from Salem, Bloodgood, Wohl & Jabara. (2011). Trade, Offshoring and U.S. Multinational Employment in the Manufacturing Employment in the United States . Office of Industries of the U.S. International Trade Commission (USITC). Retrieved from Schultz, R. A.(2006). Contemporary issues in ethics and information technology . USA: Woodbury University. Sood, R. (n. d.). Security threats offshore: Protecting intellectual property requires vigilant policies. San Jose Mercury News . Retrieved from Thurm, S. & Linebaugh, K. (2013). More U.S. profits parked abroad, saving on taxes. The Wall Street Journal. Retrieved from SB.html