Title: The Unintended Consequences of Outsourcing
Headings: The Unintended Consequences of Outsourcing
The Unintended Consequences of Outsourcing
Outsourcing Lowers Barriers to Entry and Increases Competition
Outsourcing Erodes Company Loyalty
Outsourcing Can Eliminate Jobs From the Domestic Workforce
Outsourcing Affects Insourced Countries
The Bottom Line
Article Sources

Content: While it is true that U.S. manufacturing as a contributor to gross domestic product (GDP) has not changed much, 1 ﻿ the types of manufacturing jobs in America today are not the same as they used to be. Today's U.S. factory jobs are dominated by information technology, robotics, precision machines, and engineering. The low-skilled jobs involving repetitive manual labor have been outsourced either to cheap labor abroad or to technology. As a result, entire towns and communities that relied on assembly lines and factories have become virtual ghost towns. The so-called Rust Belt is a prime example of this phenomenon. It refers to the staggering economic decline, population loss, and urban decay caused primarily by shrinking the domestic industrial sector throughout the Northeast, Mid-Atlantic, and Midwest. 2 ﻿
Outsourcing Affects Insourced Countries
The rise of the Chinese middle class in the past few decades has been attributed, in part, to its rise as a global exporting powerhouse. 3 ﻿ But as more work is outsourced to that country, Chinese workers will begin to demand higher pay. The ripple effect predicts that China's competitive low-wage advantage will eventually be eliminated, and the boost to economic production that resulted will also depart. Outsourcing also takes labor out of the workforce of a country and sets laborers to work doing tasks that may not be critical to their own country's development or growth, but pays better nonetheless.