The purpose of this research is to examine the phenomenon of outsourcing, which is the name give to the use by businesses in the United States of labor in foreign countries--notably, in current business discourse, the transferring of American jobs to other countries. The plan of the research will be to set forth the context in which the phenomenon has occurred in recent years and then to discuss specific issue fronts that have formed the content of the debate over the attributes of the practice: in particular, the effects of outsourcing on the US economy, on outsource countries, and on American businesses, as well as the potential benefits and disadvantages of outsourcing, the public-policy implications of the practice, and the range of concerns relevant to the companies that engage in outsourcing protocols.
The effect of outsourcing on the US economy has been a core concern of much outsourcing discourse. Those who favor it say that outsourcing improves the US economy because it enables businesses that do so to increase their productivity, hence their profitability and return on investment, as well as increase the benefits that accrue to shareholders from the other increases (Drezner, 2004). On this view, the economic effects of outsourcing are linked to the benefits of international trade. However, there is also a view that outsourcing has contributed to the domestic unemployment picture, since American jobs are lost to foreign sources when outsourcing occurs. According to Drezner, the problem is not really unemployment per se but the fact that outsourcing has been taking place in the context of an otherwise declining economy. Accordingly, by that analysis, the problem with loss of American jobs has to do with other economic declines, not with outsourcing per se. An important economic factor in that regard is technology, which is cited by both Drezner and Madrick (2004). In addition, Drezner (2004, p. 3) cites reports that in 2003 ...