Effects of Outsourcing on Organized labor

The main rationale of industries

The main rationale of industries is to make profits, not create jobs. If work can be done overseas at a much lower cost, the contemporary industry will definitely take the chance of improving their profit structure because Corporate Social Responsibility does not include paying more for work at home that can be done at a fraction of the cost overseas. Outsourcing of labor has taken many jobs from Americans, most of which are in the manufacturing sector which is primarily responsible for building America’s flourishing economy. American union leaders have tried to convince large industries that keeping jobs at home will benefit both the country and the economy.

However, advocates of outsourcing and globalization are of the opinion that globalization has had a positive effect on a large segment of the world’s population.  And they also argue that industry does not need cheap labor but value for money paid. The best value labor force is where workers are educated and have the expertise to use the latest technology in their work. When firms outsource, the decision is taken after a thorough analysis of their competitive advantages in the value chain and only those activities are outsourced that can be produced cheaper and better in another facility, be that in the same country or overseas. Established companies are now realizing that their present processes are no longer appropriate for producing their main products.

Major Advantages

There are major advantages such as reduced costs, reduced production time for the product to reach markets and superior modernism may result from business relationships based on market value chains. Because the reason for outsourcing of labor is generally part of a larger bid to adapt to new situations and technology, the proof is now available which proves that there are higher health and safety risks involved when adopting outsourcing strategies especially to underdeveloped countries like India. This happens because contractors like to cut corners to save money and because people with the required skills and expertise are not hired to cut costs.      


The argument behind a lot of managerial decision is the creation of a more flexible workforce which is now becoming essential for the best management of labor. A centralized payment system could not facilitate the improved competitiveness required by manufacturing enterprises. The word “flexibility” has been given several expressions which are the different forms of work which addressed many issues that hindered flexibility but speeded up the process of reforming management as well. The various form of flexibility included “functional flexibility” which would be used for attempting new and innovative production process.

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