International Outsourcing Uptick - Is it Helping Or Hurting the Global Economy?
When US corporations are forced to cut labor costs during recessions they often lay off large numbers of people and then try to attempt to outsource as much as possible.
During this past recession the United States has lost a huge number of jobs, as factories close, as retailers lay off people and as government has to cut costs because tax base revenue is trickling in at such a slow rate.
What is very interesting is that many of these corporations have decided to outsource their jobs internationally.
In some regards this is good for other countries because they were economically hit even worse than the United States as the global GDP slowdown is well over 8% and that is huge.
In fact, it's something over $5 trillion worldwide.
And that's only for one year.
Imagine living in a country that had a huge amount of poverty and people couldn't afford to eat even before the recession.
You can begin to see the problem and what a godsend it is for US corporations to outsource internationally.
Still, many of the US corporations that outsource are also very slow to pay the international companies that hire to do things for them.
In fact, some of these international outsourced companies become cash flow banks.
Let me explain.
If a US corporation has other companies in other countries doing things for them, then these companies not only have to pay for the labor, and the facilities to get those tasks done, but they also float the inventory until paid.
Then the US Corporation often waits 60, 90, I20, or even 180 days to pay.
So you can see we are helping the global economy by providing jobs in other countries, but we are also using them as cash flow banks and exploiting them in many ways.
Sometimes we need to look at the bigger picture of what we are doing and why? It's not that I am against making a profit, I am a capitalist make no mistake, but there are repercussions to every action, and in the long term we need to be thinking about these issues as well.
Sometimes quarterly profits and shareholders equity get in the way of what's best for the company in the long-term.
Please think on this.
During this past recession the United States has lost a huge number of jobs, as factories close, as retailers lay off people and as government has to cut costs because tax base revenue is trickling in at such a slow rate.
What is very interesting is that many of these corporations have decided to outsource their jobs internationally.
In some regards this is good for other countries because they were economically hit even worse than the United States as the global GDP slowdown is well over 8% and that is huge.
In fact, it's something over $5 trillion worldwide.
And that's only for one year.
Imagine living in a country that had a huge amount of poverty and people couldn't afford to eat even before the recession.
You can begin to see the problem and what a godsend it is for US corporations to outsource internationally.
Still, many of the US corporations that outsource are also very slow to pay the international companies that hire to do things for them.
In fact, some of these international outsourced companies become cash flow banks.
Let me explain.
If a US corporation has other companies in other countries doing things for them, then these companies not only have to pay for the labor, and the facilities to get those tasks done, but they also float the inventory until paid.
Then the US Corporation often waits 60, 90, I20, or even 180 days to pay.
So you can see we are helping the global economy by providing jobs in other countries, but we are also using them as cash flow banks and exploiting them in many ways.
Sometimes we need to look at the bigger picture of what we are doing and why? It's not that I am against making a profit, I am a capitalist make no mistake, but there are repercussions to every action, and in the long term we need to be thinking about these issues as well.
Sometimes quarterly profits and shareholders equity get in the way of what's best for the company in the long-term.
Please think on this.