Outsourcing is the process of designating a company's business processes that may have been previously performed internally to an external agency in order to enhance their service quality, driving innovation or deriving benefits of lower labor cost.  Outsourcing also enables companies to generate better revenue recognition and to provide them an added competitive differentiator. Outsourcing also reduces the need to hire and train specialized staff, brings in fresh engineering expertise and reduces capital and operating expenses. At the turn of the 21st century, outsourcing became popular in the United States. The term outsourcing is also known as offshoring which is the taking of a function out of one business and relocating it to another country.

Companies may seek internal saving to focus money and resources towards core business by outsourcing certain specialized job functions, such as payroll, to ADP or customer relations.

The textile and apparel industry was a very lucrative business in the United States, before moving this sector overseas. The textile and apparel industry in the United States has shrunk by more than 500,000 during the past decade. This has actually benefited the American consumers, because of foreign trade, or nearly 20% over the past decade. Consumers spend about $330 billion per year on clothing; they saved some $66 billion in 2003 alone.

The quality of call centers has been a challenge when companies moved them from the United State base location over to India. There was a major language barrier that frustrated American customers.  This type of unsatisfactory customer service forced long term customers to take their business elsewhere.  

The expansion of technology has allowed the growth of groups of people using online technology to use outsourcing as a way to build a viable service delivery business that can be run from virtually anywhere in the world.  With the growth of technology, it has allowed business partners to communicate and solve issue quicker, save money on air fare, because you can telecommunicate with anyone from around the world without leaving the office.

There is certain tax cut advantages that company's can benefit from by outsourcing.  Companies that outsource can avoid burdensome regulations, high taxes, high energy costs, and unreasonable costs that may be associated with defined benefits in labor union contracts and taxes for government mandated benefits. Some of the tax benefits companies are eliminating by outsourcing are social security, Medicare, safety protection (OSHA regulation) and FICA taxes.

Outsourcing is greatly affecting the economy in the United States. While the sole purpose of outsourcing is to increase a company's revenue and to become more competitive, but the real issue that I see that has been increasing in the past eight years, is the effect it is having on the American middle class people. Those people who fall into this category have lost jobs due to companies deciding to transfer their job function to another country. There is an increase in unemployment because the job skills that some people had with one company is hard to transfer over to another company. Many have to go back to school to receive additional training or take a job that pays less than the job they had before.

President Barack Obama, is pushing for tax cuts for the middle class and tax cuts to businesses who create jobs in the United States. By doing so, it will help to decrease the unemployment percentage and the deficit. It will give husband and wives a strong foundation of reassurance that their family will have a better future. They will be able to enjoy life, instead of wondering month to month or year to year if they will be able to pay the mortgage, put food on the table, and clothes on their back. I believe if the middle class is thriving the businesses in their community will reap the benefit.  It allows the consumers to purchase better quality merchandise at a cheaper and affordable cost.

But, how protected are the American jobs? If you have a job that is on-site, or you're dealing with the customer in person, basically any job function that is performed back at the office potentially can be outsourced. I understand that companies like the idea of moving part or all of it's business functions overseas because it can save them money by using workers in areas where salary demand are low. But, if the numbers of the American people lose their well paying jobs for lower wage jobs, it will definitely affect the economy. The American people will not be able to put money back into the economy by spending on fancy gifts, investing, and going on vacation.  They will instead conserve their income to only make purchases that are necessary for their family to survive.