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The Advantages and Disadvantages of Outsourcing to the Host Country’s Economy

Many businesses, mainly in developed countries, have turned to outsourcing. What is outsourcing? Most countries, sometimes, lack the expertise or skill to produce their own products. This leads them to look for expertise and skills in different countries. This is referred to as outsourcing. However, outsourcing, in the present day, is not only about finding the expertise and skills to manufacture a product. It is also about finding the most cost-effective method of getting the job done. Service outsourcing has gained much popularity in the recent past and this is when countries hire the expertise and service of another country to perform a specific service. Whatever the outsourcing reason, there are advantages and disadvantages to a country’s economy. This essay provides the advantages and disadvantages of outsourcing to a country’s economy.

Outsourcing can be beneficial for many countries as it allows the country doing the outsourcing to stay competitive globally. For example, America outsources many products to various countries, such as, Vietnam and China. Doing so, enables America to stay competitive globally and provides the country with cheaper goods and services. Cheap goods enable American citizens to spend extra money on various other sectors. If things are cheap, people will always spend money irrespective of their need for it. This is extremely good for a country’s economy. Furthermore, outsourcing also enables a country to keep the high quality jobs within their country while the “low quality” jobs are sent out.

On the other hand, outsourcing can have a downside to a country’s economy. Many people in the middle classes can lose jobs when services are outsourced to other countries. For example, thousands of people lost their jobs when Nike decided to outsource their productions to Pakistan and Bangladesh. When people lose jobs it affects their ability to spend. Lack of jobs result in lack of spending, and this creates problems within a country’s economy as people are financially challenged when it comes to spending.

However, outsourcing also encourages the middle class to do better and study more in order to get the better jobs. Outsourcing takes away the menial jobs which the less educated do. This pushes people to study more and earn more degrees which are beneficial to a country’s economy as it produces more people who are able to do higher paid jobs.

On the downside, this factor too can be disadvantageous as countries will have to make up jobs which only a handful of highly educated people could do. How can everyone in a country do high-end job? How will a country manage? This causes a pile up of sorts where most of the countries educated are left jobless, and this, once again, affects the economy.

Outsourcing has many advantages and disadvantages to a country’s economy. There is nothing that says it is more or less advantageous to a country’s economy. However, it is a practice that has been happening for many decades. It is a controversial subject, but one that still needs a proper solution.