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Is offshore outsourcing a threat to local economy?

This is not a new debate. Ever since offshore outsourcing started, there has been a lot of noise about how offshore outsourcing is a threat to the local economy. Some even go a bit too far by claiming that offshore outsourcing is a bigger threat than terrorism.

It is true that some jobs are being lost here locally due to jobs being outsourced offshore. Lobbying groups put a lot of pressure on policymakers impose restrictions on offshore outsourcing.

But come to think of it. Whether it is small to medium size business or a large corporation, they have one goal in common which is to maximize their profit. It is either maximize the profit for themselves or for their shareholders and they will do that at whatever steps necessary.  If offshore outsourcing saves them millions in wages and benefits, then it will be very practical to assume that these companies will do so to maximize their profit.

Skilled labor at low cost makes this offshore outsourcing irresistible for the business owners. If I as a business owner can get a job done for $10k a year offshore as opposed to paying a local employee $70k a year plus benefits, then the outcome is pretty obvious.

People who oppose offshore outsourcing fail to mention the benefits of it. Yes, it is true that some jobs are being lost. In this current state of global economy, nothing no one can do about it. However, when the jobs are outsourced offshore, that makes the profitability of the businesses go higher. More reported income means more tax for the government. Government can use the extra tax money not just to maintain the usual expenses but can use part of the extra tax money on programs that can create more jobs locally.

PCMAG published a nice article titled “The Benefits of Offshore Outsourcing.” If you do further research, you will find a lot of other articles outlining the benefits of outsourcing. At the end, businesses will have to make a decision as whether to outsource the job offshore or keep it locally.

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