Final Paper

Hello Maewrite,

 

Please see attachment titled ‘Final Paper’. Thank you

Hello Maewrite,

This project is for my final paper and is a cumulative of the Research Problem Identification and Justification and Literature Review that you already did. I have attached them for your review. This final report must include problem, sub problems, data and sources, assumptions and delimitations, importance of the study, hypothesis, literature review, and conclusions based on the findings, was hypothesis supported or not based on the findings, recommendations to management based on this research. Paper to be 25-30 pages excluding title page and references pages, double spaced. Please see below for further guidance. If you have any questions, Please stand by. Thank you.

Final paper will be at least 6000 words. Paper will be written in the third person and contain at least 15 references or citations, which is the expectation for a project of this magnitude. Paper will contain a bibliography of at least 10 credible sources that will match the references or citations noted in the body of the paper. Paper must be scholarly, which means giving credit where due, being thorough and not cursory, and being grammatically correct. Paper must be presented in APA style.

Format for the final paper to be:

• Problem.

• Sub-Problems.

• Data and Sources used.

• Assumptions and Delimitations.

• Importance of this study.

• Hypothesis.

• Literature Review.

• Conclusions based on findings.

• Was the hypothesis supported or not by the research findings.

• Recommendations to Management based on this research.

Research Problem Identification and Justification

The Project’s problem

-Why are American firms choosing to “offshore” their work?

Sub problems

-The ethical considerations of offshoring
-Americans lose job opportunities because American factories are relocating their operations in Asian countries.
-Lack of incentives offered by the government for business owners

Data needed

-American companies that are offshoring
-Data on US unemployment
-Data on comparison of wages for Americans and offshore workers
-Data on benefits demanded by American workers and savings on benefits when offshoring
-Data on union demands and rights of workers in the US versus offshore companies

Assumptions and delimitations

-It is assumed that most of the information will be online in the company’s respective websites
-Advantages and disadvantages of offshoring

Importance of the study

-This study is important in order to understand the motivations of organizations in offshoring their operations, thus depriving many Americans of job opportunities. This will look into the incentives that should be given to new businesses, and the incentives that Asian countries are offering to multinational companies.

Hypothesis

-American companies are offshoring their operations because of the huge profits they get from the low wages in other countries as well lower taxes and ease of doing business.

America’s Losses and Gains in Offshoring 1

Running Head:

AMERICA’S LOSSES AND GAINS IN OFFSHORING

AMERICA’S LOSSES AND GAINS IN OFFSHORING

Sean D. Smith

Webster University

Literature Review

Offshoring or Offshore outsourcing has been defined as the migration of jobs to poor countries from rich countries, leaving the people who perform them behind. (Blinder, 2006). It is a term that became common only recently to describe the practice of companies from developed countries of contracting with businesses beyond their country borders for services that would have been done by in-house employees (Levine, 2012). According to Byrne (2010), between 2000 and 2009, the U.S. shed some 5.38 million manufacturing jobs and 2.4 million of these were attributed to the trade deficit with China, according to the data of the Commerce Department. The forecasts for job loss are frightful, according to some quarters.

A report submitted to the Congressional Research Service prepared for members and committees of Congress entitled Offshoring (or Offshore Outsourcing) and Job Loss among U.S. Workers (Levine, 2012) will be the foundation of this paper. The recent developments of offshoring previously limited to manufacturing has expanded to service providers and resulted in heightened concerns about public policy in the U.S. (Cline, 2012; Roberts, 2010) due to the extent of job losses and the lack of existing programs so unemployed US workers can adjust to the changing mix of jobs. The Economist (2013) printed a report entitled “Home or abroad? Herd Instinct” discussing the growth of outsourcing contracts entered into by European and American firms. The report included a short list of companies who outsourced their production to what country and why. Graebel Companies Inc. (2012), published the results of their own research on global mobility projections for the next 10 years. Norman Matloff (2005) wrote about what can go wrong about offshoring published in IT Pro: Perspectives. Raul Sood (n.d.) discusses security threats offshore and areas that American companies need to protect when using offshore labor. Another article written by Aron and Singh (2005) discusses identifying and managing offshoring risks and evaluating its operational and structural risks to make it right.

Suzy Khimm (2012) in The Washington Post reports about the results published in a new paper from the London School of Economics Center for Economics Performance where 3 economists examined fifty eight U.S. manufacturing companies from year 2000 to 2007 and found that offshoring tends to increase productivity and reduce costs. In April of 2013, Matthew Davis wrote a report for The National Bureau of Economic Research that “Service Offshoring Raises U.S. Productivity” based on a similar report written by Amity and Shang-Jin (2006) that service offshoring accounting for around 11% of U.S. productivity growth in manufacturing industries from 1992-2000 compared to the 3% to 6% gain attributable to imported material inputs. David (2013), the Chief revenue officer and co-founder of Kultura came out with another article published in the Huffington Post about the US employment debate.

Lewin & Peeters (2006) said that many companies resorted to offshoring because of stiff competition, so they needed cost cutting strategies. The authors presented an exhibit of the short history of offshoring at General Electric from 1990 to 2004 and conducted a survey of 650 US Forbes Global 2000 companies. This view was reinforced by John T. Chambers Jr. in “Offshore: Skirting U.S. taxes” that appeared as an editorial in The Charleston Gazette (2013). Chambers is CEO of Cisco, an international electronics giant. Thurm & Linebaugh (2013) of The Wall Street Journal presented their analysis of 60 big U.S. companies who sent $166 billion offshore in 2012. The strategy resulted in shielding more than 40% of their profits for the year from U.S. taxes. In 2009, Pricewaterhouse Coopers LLP published “Foreign Filings: Navigating International Tax” as part of Growing Your Business reiterating that “Efficient global operations require an understanding of international taxes as well as an awareness of legislative changes poposed by the Obama Administration.” The publication contains a comparison of corporate and individual tax rates of 38 countries worldwide. On June 26, 2012, the Internal Revenue Service posted in their Frequently Asked Questions and Answers the details of their “Offshore Voluntary Disclosure Program.” The Annenberg Public Policy Center (Gore, 2012) also published Talking Tax Breaks for Offshoring.

Offshoring as an ethical issue was discussed by Robert A. Chultz in his book (2006) and by Friedman, 2005. In 2008, the German Bishops’ Conference Research Group on the Universal Task of the Church published a study on “World Economy and Social Ethics.” Amanda Rose (2007) discussed how ethics, morals, values and standards have become more complex, particularly affecting HR decisions of multinational companies.

The data on mass layoff due to outsourcing and offshoring work (Brown & Siegel, 2005) has been published on Monthly Labor Review Online by the Bureau of Labor Statistics. Another relevant report has been written about Trade Offshoring and U.S. Multinational Employment in the Manufacturing Employment in the United States, 1999-2008 (Salem, Bloodgood, Wohl & Jabara, 2011). Trade in Tasks (Lanz Miroudot & Nordas, 2012) and Trends and Impacts of Offshoring and Employment (Organisation for Economic Cooperation and Development, 2006) can be found at the OECD website

According to Dr, Paul Craig Roberts (April 18, 2010), only a handful of people have objectively looked at the outsourcing issue, which includes Americans whose careers were destroyed by outsourcing. The author discusses Outsourcing America, a new book published by the American Management Association written by brothers Ron and Anil Hira (2005). According to a study conducted by the University of California, there are 14 million white-collar jobs that are vulnerable to outsourcing. The authors call these vulnerable jobs the jobs of the American Dream. The book shows how outsourcing is affecting America in a bad way.

This work will try to understand the motivations of organizations in offshoring their operations, thus depriving many Americans of job opportunities at home. Similarly, incentives that should be given to new businesses will be analyzed, together with incentives that Asian countries are offering to multinational companies so they will choose to outsource. The question is between ethical considerations and profits that is gained from low wages offshore and greater productivity, as well as lower tax rates and ease of doing business.

References

Amiti, M. & Wei, S. (2006) Service offshoring and productivity: Evidence from the United
States. The World Economy. Blackwell Publishing 32(2).

Aron, R. & Singh, J. V. (2005). Getting offshoring right. Harvard Business Review. Toolkit.
Retrieved from

http://www.business.ulst.ac.uk/intlbusiness/courses/bmg900m1/

AronSingh

Blinder, A. (2006). Offshoring: the next industrial revolution. Foreign Affairs. Retrieved from

http://www.foreignaffairs.org

Byrne, J. A. (2010). Out-source of pain: US companies moving jobs offshore at record pace. New
York Post. Retrieved from

http://www.nypost.com/p/news/business/

out_source_of_pain_AdkCRvpScy5WLN2Sc96rUK

Chambers Jr., J. T. (2013). Offshore: Skirting U.S. taxes. The Charleston Gazette. Retrieved
from http://www.wvgazette.com/Opinion/Editorials/201303020079

Cline, Andrew. (2012). Column: Offshoring jobs, the American way. USA Today News.
Retrieved from

http://usatoday30.usatoday.com/news/opinion/forum/story/2012-08-

07/outsourcing-romney-obama-china-jobs/56859884/1

David, S. (2013). The US Employment Debate: Offshore or Onshore? Huffington Post. Retrieved
from

http://www.huffingtonpost.com/shay-david/the-us-employment-

debate_b_2837168.html

Davis, M. (2013). Service Offshoring Raises U.S. productivity. The National Bureau of
Economic Research. Retrieved from

http://www.nber.org/digest/mar06/w11926.html

Friedman, W. H. (2005). An economic and ethical analysis of offshoring: intercountry
outsourcing of IT Employment. PA: Idea Group Publishing.

German Bishops’ Conference Research Group. (2008). Relocation of jobs: development
opportunities and human dignity, socio-ethical considerations. A study by the Group of
Experts on “World Economy and Social Ethics.” Bonn.

Gore, D. (2012). Talking tax breaks for offshoring. Fact Check.org: A Project of the Annenberg
Public Policy Center. Retrieved from

http://www.factcheck.org/2012/10/talking-tax-

breaks-for-offshoring/

Graebel Companies Inc. (2012). Offshoring? Reshoring? Nearshoring? How will global mobility
change in the next 10 years? Graebel: Peace of mind. Worldwide. Retrieved from

http://www.graebel.com/NR/rdonlyres/EDBCFCB7-75DC-43BD-8008-

984820EDD7B8/253/Graebel_Whitepaper_Offshoring_HR_1572214820

Hira, R. & Hira, A. (2005). Outsourcing America: What’s behind our national crisis and how we
can reclaim American Jobs. Amacom.

Home or abroad? Herd instinct. (2013). Companies need to think more carefully about how they
offshore and outsource. The Economist. Retrieved from

http://www.economist.com/
news/

special-report/21569575-companies-need-think-more-carefully-about-how-they-
offshore-and-outsource-herd-instinct

Internal Revenue Service. (2012). Offshore Voluntary Disclosure Program: Frequently Asked
Questions and Answers. Retrieved from

http://www.irs.gov/Individuals/International-

Taxpayers/Offshore-Voluntary-Disclosure-Program-Frequently-Asked-Questions-and-
Answers

Khimm, S. (2012). Offshoring creates as many U.S. jobs as it kills, study says. The Washington
Post. Retrieved from

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/12/

study-offshoring-creates-as-many-u-s-jobs-as-it-kills/

Lanz, R., Miroudot, S. & Nordas, H. K. (2012). Special Section, Chapter 7. Trade in Tasks.
Organisation for Economic Co-operation and Development.

Levine, L. (2012). Offshoring (or Offshore Outsourcing) and job loss among U.S. workers.
Congressional Research Service.

Lewin, A. Y. & Peeters, C. (2006). Offshoring Work: Business hype or the onset of fundamental
transformation. Long Range Planning: Elsevier LP Journal. Retrieved from

https://dipot.ulb.ac.be/dspace/bitstream/2013/9039/1/Lewin_Peeters_2006_LRP_Offshori
ng_business_hype_or_transformation

Matloff, N. (2005). Offshoring: What can go wrong? IT Pro: Perspectives. IEEE Computer
Society.

Organisation for Economic Cooperation and Development. (2006). Offshoring and Employment:
Trends and Impacts. OECD: Better Policies for Better Lives. Retrieved from
http://www.oecd.org/industry/ind/offshoringandemploymenttrendsandimpacts.htm

Price Waterhouse Coopers LLP. (2009). Foreign filings: navigating international tax. Growing
Your Business Volume 60. Retrieved from

http://www.pwc.com/us/en/private-company-
services/pdf/gyb_vol_60_foreign_filings

Roberts, P. C.
(2010). The offshore outsourcing of American Jobs: a greater threat than
terrorism. Creators Syndicate and Global Research

Rose, A. (2007). Ethics in the business environment. McGraw-Hill Highered. Retrieved from
http://highered.mcgraw-hill.com/sites/dl/free/0077111028/536508/EHR_C02

Salem, Bloodgood, Wohl & Jabara. (2011). Trade, Offshoring and U.S. Multinational
Employment in the Manufacturing Employment in the United States. Office of Industries
of the U.S. International Trade Commission (USITC). Retrieved from

Schultz, R. A.(2006). Contemporary issues in ethics and information technology. USA:
Woodbury University.

Sood, R. (n. d.). Security threats offshore: Protecting intellectual property requires vigilant
policies. San Jose Mercury News. Retrieved from
http://www.techalpha.com/ideas/SecurityThreats

Thurm, S. & Linebaugh, K. (2013). More U.S. profits parked abroad, saving on taxes. The Wall
Street Journal. Retrieved from

http://online.wsj.com/article/

SB10001424127887324034804578348131432634740.html

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