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Offshoring to foreign subsidiaries has been a controversial issue spurring heated debates among economists. Jobs go to the destination country and lower cost of goods and services to the origin country. On the other hand, job losses and wage erosion in developed countries have sparked opposition.
By now it's routine for us to hear about jobs going overseas, or certain aspects of manufacturing or customer service being outsourced to countries like China and India. But now outsourcing ...
From 2000 to 2010, the U.S. experienced a net loss of 687,000 jobs due to outsourcing, primarily in the computers and electronics sector. Public disenchantment with outsourcing has not only stirred political responses, as seen in the 2012 U.S. presidential campaigns, but it has also made companies more reluctant to outsource or offshore jobs. [102]
If there's one position that both presidential candidates can agree on, and it may be the only one, it's that outsourcing jobs overseas, or "offshoring," is absolutely terrible for American workers.
Some key disadvantages of global sourcing can include: hidden costs associated with different cultures and time zones, exposure to financial and political risks in countries with (often) emerging economies, increased risk of the loss of intellectual property, and increased monitoring costs relative to domestic supply.
The ORN research team has started to conduct survey- and case study-based research to better understand the development of these clusters. A very recent project, for example, seeks to investigate the emergence of new IT and software development clusters in Latin America which attract foreign investors from Spain and the U.S. in particular. [20]
In an international context, establishing a foreign subsidiary as a contract manufacturer can have favorable tax benefits for the parent company, allowing them to reduce overall tax liabilities and increase profits, depending upon the activities of the contract manufacturer. This is a form of true protectionism.
Through online outsourcing a company can relieve itself of secondary tasks and concentrate on core issues, thus improving its efficiency. Or as Peter Drucker expressed it, "Do what you can do best and Outsource the rest." [5] According to Deloitte’s research, the primary reason to outsource jobs is to save costs. The second reason is to focus ...