United States's role in outsourcing Essay Example | Topics and Well Written Essays - 750 words

United States's role in outsourcing - Essay Example Outsourcing presents both direct and indirect advantages and disadvantages. Several unfavorable conditions in the country make American companies outsource foreign employees and overseas locations. This paper explores United States role in outsourcing and its impact. The current  U.S. corporate tax code encourages companies to move their operations to foreign locations. It results in the offshoring of jobs that could currently be located in the United States. The government condemns the outsourcing of jobs out of the country by U.S. multinational corporations because it fails to solve issues the employment crisis in the country. In addition, outsourcing weakens the U.S. competitiveness in the international economy. The government tries to attract multinational companies in the country through tax incentives and formulation of policies that provide a favorable work environment. An increase in taxes for multinational business triggers an exodus of business, investments, and work opportunities (Wolverson 1). Multinationals often shift to low-tax countries in which they can maximize their profits. Commonly referred to as ‘tax havens’, such countries offer small corporate tax rates to persuade multinational corporations to transfer inc ome abroad. Production and labor costs are a cause for outsourcing. Other countries offer cheaper sources of labor as compared to American workers who demand high wages. China, for example, has an unrivaled large and reliable labor base that accepts lower pays. While unemployment is rampant in the U.S., it is worse in developing countries such as China, Singapore and Malaysia (Wolverson 1). As companies outsource to China, Americans remain unemployed because of limited job opportunities at home. The companies benefit because they reduce their capital and operating costs. Regrettably, the country loses its productivity and competitiveness in the global economy. Outsourcing