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
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Content: The Unintended Consequences of Outsourcing
Business Corporate Finance & Accounting
The Unintended Consequences of Outsourcing
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Adam Hayes is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7 & 63 licenses. He currently researches and teaches at the Hebrew University in Jerusalem. Learn about our editorial policies
Adam Hayes
Updated Jun 16, 2020
The outsourcing of labor overseas is a natural result of the globalization of markets, and businesses' drive to cut costs to maximize profits. If workers in countries such as India or China can do the same job for a fraction of the price that domestic labor demands, those jobs will be sent abroad. It's a good business strategy that allocates labor to its most efficient use, at least according to economists. In the end, the effect should ripple down and help consumers by lowering the costs of production which can be passed on to buyers, and to shareholders who will see increased profit margins. Without outsourcing, the United States may not have maintained its status as an economic superpower as the world became an integrated global marketplace.