Question

How do you predict that outsourcing from U.S., Japanese, and European firms to China, Taiwan, and India will affect the economies and firms in the three sourcing countries?

Answer 1

Outsourcing in India, China, and Taiwan can be economically unstable for developed nations like the USA, Japan, and UK. The U.S, Japanese and European countries are one of the fastest growing economies in the world. The economic growth of Japan is 10%, the economic growth of the USA is 18.2% and Economic growth in European nations is more than 15%. Thus, these nations are considered as developed countries. The standard income and developed countries remain always higher than developing countries like China, India, and Taiwan. Thus, an investment in developing nations can reduce the profitability of developed nations. Moreover, the high economic growth of developed nations may reduce by providing outsourcing services to India, Taiwan, and China. Thus, outsourcing in these developing nations will affect the economies and firms of three sourcing countries because

• It may reduce the profitability of the economically strong nations like the U.S and Japan because the growth of average economy and per capita income is lower in developing nations than developed countries.
• Japanese, U.S and European firms are technologically developed. Thus, product price remains higher. However, outsourcing products in developing nations may not be profitable as most of the products will be higher than the purchasing range.
• Outsourcing products to economically developing countries will promote firms of USA, Japan, and European nations to reduce standard product price which is adversely impactful on organizational profitability.