Many firms outsource services with the objectives of smoothing production cycles and benefiting from specialization. Traditionally, when business is thriving, firms are tempted to expand facilities, hire more employees, and bring more of the business in-house in hopes to better control costs. However, in today’s economy, outsourcing teams can create innumerable opportunities for well-run companies to not only increase profits, but also increase productivity and efficiency.

There is much controversy that outsourcing jobs to developing countries is a major factor in the economic growth of the United States. Is true that outsourcing jobs creates a large population of under-employed. However, under closer examination, it is clear that outsourcing jobs also strengthens the economy by ultimately creating more jobs and stimulating trade. It is debated, and many economists agree, that the economy benefits stronger from trade than it suffers from lost jobs.

Subsequently, using offshore resources in selected countries makes good economic sense. Aside from the cost advantages, global sourcing provides several other practical benefits, including the ability to have programmers working on projects 24/7, the opportunity to customize products and services to meet local needs, and the means of geographically deploying workers and facilities to succeed in globally dispersed, highly competitive markets. With outsourcing, U.S.A. management can better focus on their core business model and expand their efforts by having a small team do more work than ever before.

It is clear that there is a positive association between the rate of outsourcing and productivity growth. Cost savings and use of offshore resources lower inflation, increase productivity, and lower interest rates. As individuals, we benefit from outsourcing in ways ranging from better customer service to ever-improving technology at ever-decreasing prices. For business firms, cost savings from outsourcing mean more money is available for new investment. As outsourcing increases, costs may decline, and investment in facilities, equipment, and manpower can be reduced. The rationale for outsourcing looks simple and is compelling for the U.S. to increase productivity.