Question

For your initial discussion post, respond to the following prompts: Select two of the problems and/or benefits associated with offshoring in the United States. Explain what they are, arnd what their affects are to the economy and/or the US as a whole. . Provide a recommendation for each of your selections based on your readings and possibly your own personal experiences.

can i get examples please?

Answer 1

Offshoring is the process of relocating a business to a new country. It can be relocation in parts or relocation in full. It can also be relocation of either manufacturing or services or both.

We will discuss 2 examples of both benefits and problems of offshoring.

2 benefits of offshoring-

• Lower labor costs- Most of the developing countries have far lower wages than the wages in the United States. This obviously lends itself very well to cost-cutting. US companies who manufacture in China or provide services through India save a lot of money in terms of wages.
• Easy availability of skilled labor- Countries such as Philippines, China, India and Indonesia produce many skilled workers every year in terms of people graduating in engineering, computer sciences, technology etc. This provides a vast pool of easily available skilled labor to choose from.

2 problems of offshoring-

• Loss of jobs at home- Offshoring involves manufacturing the same product somewhere else. This leads to creation of jobs in other countries while at the same time loss of jobs in the US. This results in higher unemployment in the US.
• Cultural and social issues- Cultural difference can lead to a lot of confusion and issues. An American might prefer to talk clearly and candidly while an eastern employee might not appreciate that very much. A US company might want to follow each and every law strictly while the locals might want to skirt around the laws if they dont see the value in them. All this can lead to many issues.

The effects of offshoring are immense. Its not simply a question of loss of jobs. Loss of jobs has a spiral effect in the economy. Loss of jobs results in lesser spending as lesser money is available with the public. That then results in even lower demand and hence lower production. That lower production once again leads to more job loss and so on. This results in offshoring having far higher impact on the country and economy. While cost savings do often happen in offshoring, they are only beneficial if they are being invested back in the US. Otherwise the money is not benefiting the US economy.

We discussed 2 problems with offshoring above. We recommend the following for each-

• For job loss- It should be made sure that the cost benefits coming from offshoring are being invested in the US economy again. The government should mandate that a defined part of cost savings will be invested in US economy. The government should also mandate that if same skilled labor at comparable cost is available in the US, then the firm must produce in US. Companies offshoring should also be encouraged to provide skills training to employees it is laying off so that they are better able to enter the job market again.
• For cultural issues- These issues can be sometimes mitigated with the help of cultural training on both sides, sensitivity towards each others' cultures and more inter-mixing of the operations on the two countries. This will get both sides more accustomed to the nuances about each others' cultures.