In recent years, the megatrend “globalization” has increased economic competition in many
industries to a whole new level. Companies from well-established industrial nations in Western
Europe, Japan and the United States especially face an abundance of new competitors from
emerging countries. These industrialising countries are distinguished by speed and a significantly
better cost structure, which is mainly the result of lower labor costs. Furthermore, in order to be
able to survive on the market, the companies in industrialized nations are forced to strike new paths
to maintain their competitiveness.
The concept “cost reduction” and “focusing on the core business” were established to describe how
to strengthen the competitiveness of businesses. The combination of these two ideas are more and
more reflected as a key that secures business success. The logical consequence is that a variety of
companies intensively busy themselves with outsourcing, which can be seen as a way to match both
concepts. Since the beginning of the outsourcing debate in the 1990s and the first outsourcing of
parts of businesses, a lot of things have changed in the global economy. In 2009, the Canadian
market research firm XMG GLobal rated the global outsourcing market with an impressive volume
of $373 billion. Even a considerably bigger number of the outsourcing market was reckoned by the
research firm IDC. They prized the market of outsourcing of $614.2 billion and predicted a further
annual growth rate of 10.9% in 2006. (((references)))Since the outsourcing became popular,
companies in the United States of America started hireing external organizations in China to
perform some of their specific business functions. Thereby, it has an positive effect on the US
economy because American companies can save money through outsourcing which opens up new
opportunities for greater entrepreneurship. This leads to a higher number of Americans that hold
higher level jobs. Also, if a company has to pay lower wages in China, then the company can
theoretically reduce the price of a selling good in America. So, outsourcing is not just benefitial to
the American economy, but also to the consumers. At the same time, labour in China rises through a
higher number of jobs offered. Basically, Chinese labour force get the chance to do more
manufacturing, programming and service jobs from American companies. It gives thm the chance to
earn and save money which they can use later for e.g. education purposes. This can help them
increasing their living standards by claiming a more profitable job. On the other side, sending work
overseas by contries with higher wages, has also negative aspects. Hiring foreign workers has an
immediate effect on the US economy by substituting jobs that would have been performed by semi-
skilled and skilled laborers with workers in China. So, the unemployment in America rises which
causes social issues. Manufacturing employment collapsed from a high of 19.5 million workers in
June 1979 to 11.5 workers in December 2009. Further, manufacturling plants have declined by
more than 51,000 plants, which equals 12.5 percent, between 1998 and 2008. Moreover, the way
management.” In my oppinion, this statement definitely reflects the today’s business world and
should be seen as a blessing for a high standard of living and a continually expanding economy
around the world.