Outsourcing has many advantages for companies who want to cut down on their expenses and find an optimal solution for the delegation of non-core tasks. However, many critics have pointed out that it has a detrimental effect on the local job market and through their low wages in offshore destinations are unfairly competing against American workers, who might offer higher quality but also cost companies much larger amounts of money.

“The real reason for issues with unemployment is not offshore competition- it is technology. Robotization, automatization, cloud services which offer freelancing opportunities to anyone who is qualified for your project’s needs”

Suzanne Berger

A very recent case is attracting a lot of attention in this direction. RR Donnelley, a Chicago based printing giant was given an overwhelming $140,000 tax credit, after saying it planned to make substantial capital investment, but actually invested zero and instead of creating jobs, outsourced them overseas.

Negative opinions about American job outsourcing

What is more, the company advises major businesses to outsource American jobs overseas to places like Sri Lanka, the Philippines, and India.

This reiterates criticism that outsourcing only works well for big corporations, yet it has a negative effect on workers. For example in the past decade trade with China has resulted in the estimated loss of 2.8 million jobs, according to a recent study by the Economic Policy Institute. In addition to the decrease in job positions, annual earnings dropped by $1,400.

Negative opinions about American job outsourcing

Economists think that protectionism is not an answer and turning away from outsourcing options will not result in significant improvement in job opportunities. In her book How we compete, author Suzanne Berger the real reason for issues with unemployment is not offshore competition- it is technology. Robotization, automatization, cloud services which offer freelancing opportunities to anyone who is qualified for your project’s needs.

Job conditions are changing and competition is fierce- regardless of its geographical boundaries. If it weren’t for the booming technological changes which necessitate job outsourcing as a way to cope with larger workloads, local companies would not be forced to look for the most cost-efficient and scalable solutions to cope with business demands.

Recent discoveries

A new study by UC Berkeley and Massachusetts Institute of Technology (MIT) researchers in fact confirms that truth is in the middle and posits that outsourcing and offshoring jobs has both positive and negative effects on American jobs and wages.

“The portrait that emerges (from this research study) is of two economies – one entirely domestic economy made up of small firms and public organizations, and another one consisting of large firms with much deeper global engagement,” says Tim Sturgeon, a senior research affiliate with MIT’s Industrial Performance Center.

In fact, researchers think domestic fears are overblown because contrary to popular opinion most international sourcing is to high-cost locations such as Canada and Western Europe due to long-term market relations built with the U.S. In contrast, the work offshored to very low-cost countries is relatively modest.