Outsourcing

Outsourcing is the practice of companies transferring work to outside sources to increase efficiency and cut costs. Outsourcing differs from simply buying products and services from a supplier. Rather than dealing at arms-length, outsourcing usually entails substantial coordination, if not outright management, of the external vendor's activities. In the early 21st century, outsourcing had one other, strongly negative, connotation: the displacement of U.S. staff by foreign workers. For example, a stereotypical example of outsourcing might be the use of a call center in India for making airline reservations for a U.S. carrier. Those opposing outsourcing argue that it destroys American jobs and erodes the power of labor unions. Proponents of outsourcing say, however, that outsourcing increases productivity and profits; while causing some short-term displacement, outsourcing ultimately enhances economic opportunity for all workers. Outsourcing is sometimes used loosely as a synonym for globalization, but outsourcing is a narrower term: unlike globalization, outsourcing does not comprehend all types of economic interdependence between countries.