us-elections 21 Dec 2012

How 2012 US Presidential Election will Impact Outsourcing Industry

The results of the 2012 Presidential election would create stability in the US economy. It is likely that the support for small businesses would be continued, and this means that the continued growth of outsourcing industry is secure. Still, there are some important aspects of the reforms proposed by the new Obama administration, and below these will be examined in detail; regarding self-employment, taxes and health insurance costs.

Health Insurance and Outsourcing

One of the reasons why many companies are choosing outsourcing agencies is the high cost of health insurance and other payments they have to pay after their employees. When hiring staff through an agency, even for long term, every aspect of the contract and employment would be taken care of. It is easier to calculate the cost per head when using outsourcing companies, and there are no commitments regarding long term employment.

The Future of Outsourcing

Although in his campaign, President Obama was communicating the message that he wanted to keep jobs in the US as much as possible, even blamed his opponent, Romney that he was planning to shift employment overseas, it is not likely that there will be any bans or restrictions. First of all; the growth of the outsourcing industry is based on real demand of the market, and without it, many smaller or larger companies in the country would not be profitable. When these companies go out of business, the government loses taxes, and this is clear for the Obama administration, too.

Is Outsourcing to Blame for the Loss of US Jobs?

So far, no reports or statistics have been created to positively confirm that the growth of outsourcing has directly impacted the number of jobs available in the US. Many experts say that robotizing production and computerization has had a greater impact overall. Keeping jobs within a company is only possible if the company is profitable. Therefore, cutting the cost of low profile operations through outsourcing some processes would enable managers to hire highly qualified talent within the United States. In this sense, outsourcing is the tool to keep the American industries profitable and competitive on the global markets.

Low Impact of Government Intervention

As long as companies pay their dues and tax on the profit generated, the government has little or no right to intervene in operations management issues. Unless outsourcing is going to be made illegal, it will grow despite the incentives the tax system offers for keeping jobs home. The only movement might be that some companies would try to keep US workers for higher level jobs, however, the difference between the cost of outsourcing and an American employee would still be higher than the tax incentive offered by the government.

Is Previously Outsourced Operation Returning to the US?

It is not very likely that companies would increase their production and operation costs based on the incentives offered. As the Obama administration will not be able to penalize companies using global workforce (as it would be illegal), the results of the presidential election have little impact on the growth of outsourcing.

– BackOffice Pro

Related Posts