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: Barriers to entry that once existed due to the capital requirements needed at the startup phase can be greatly reduced. Early movers in an industry to outsource will have a competitive advantage initially, but that advantage will continue to be eroded as more competitors follow suit, and newcomers are incentivized to join. Once everybody is participating, the initial advantage is removed completely. Outsourcing also encourages new competition by causing fragmentation and disintegration of the supply chain. In other words, new entrants can arise to exploit the fact that manufacturing may take place in a different geographic region from product design and customer support in yet another region. Each part of a business is effectively subcontracted out, and that means that any new company can hire those same contractors (or competitors of those subcontractors) and produce identical items for around the same cost as the big players. Outsourcing Erodes Company Loyalty
If a worker knows that their job may be outsourced to cheaper foreign labor at any given moment, they may lose confidence in their employer and become discouraged. As outsourcing has grown from unskilled jobs to include administrative and intellectual positions, even managerial level employees cannot be certain that their jobs are safe and secure. Workplace satisfaction and worker productivity can be negatively impacted. Additionally, if an employee, or group of employees, decides that they are being treated unfairly or are being underpaid, they can leave to start their own company in direct competition with their former employer.