Globalization of Industry through the Tools of Outsourcing and Offshoring

Aaron Rivers

Globalization of Industry through the Tools of Outsourcing and Offshoring

How These Tools are Bringing More Economic Gain than Strain to the Industrial Economic Development of the United States and Developing Nations

Western International University

COM 110 Effective Persuasive Writing

Prof . Tracey Schoonmaker

February 2 , 2006

Globalization of Industry through the Tools of Outsourcing and Offshoring

How are these Tools Establishing more Economic Gain than Strain to the Industrial Economic Development of the United States and Developing Nations

Despite what many may believe

, the tools of outsourcing and offshoring have brought about more economic gain than strain to the economies of the United States and developing nations . With the globalization of industry , outsourcing and offshoring has opened up free trade between countries , especially developing ones . These tools also create many opportunities for nations and benefits workers in both rich and poor societies

It is important to differentiate offshoring from outsourcing , which involves the transferring of company 's services to an outside source Global outsourcing sends the services of manufacturing , internet technology (IT , back -office services , call centers , finance and accounting , human resources , and processing of transactions to mostly developing nations (Offshore Outsourcing Basics ,2005 . On the other hand , offshoring , according to N . Gregory Mankiw , Harvard Economist and Head of the Council of Economic Advisor 's defines it as when .A company relocates labor-intensive service-industry functions to another country (Edmonton Journal , 2004 . An example of offshoring would be a tire manufacturer that opens a rubber factory in India in to cut down on the labor and production costs of manufacturing its product within the U .S . So in essence , offshoring takes place when a company establishes a physical industry such as a factory or store in another country outsourcing sends a particular service or services to a company in another nation . It is important to examine some of the concepts of these two concepts within today 's industry

A look into some manufacturing and IT companies will give an outlook on how offshoring and outsourcing are actually creating many jobs , while lowering production costs . For many years the Converting Machine Co . of Green Bay Wisconsin has maintained its stay in the market of designing and manufacturing the finest converting machinery for the sanitary tissue , flexible packaging and disposables nonwovens industries (www .PCMC .com , 2006 . PCMC designs machinery for companies that range from the potato chip to baby wipe industry . Peter Engardio of Business Week magazine , reports those two years after the economic slump of 2001 , PCMC 's business began to decline . This process began when one of PCMC 's biggest clients demanded that they lower there prices by 40 and insisted that they offshore there product to China . In to save PCMC from falling fatally downhill , PCMC was purchased by Missouri holding company , Barry-Wehmiller Cos . Inc , in 2004 (BWC . BWC immediately downsized workers and cut the pay of those that were nonunion . Engardio states that , In five years sales have plunged by 40 , to 170...