1. Negative effects of Outsourcing Tommy Wu

2. Why Outsource?  Labour costs are the biggest expense in business.  In the 21 st century, we began to reduce labour costs.  Offshore outsourcing has become the most common way.  However, negative effects of outsourcing have been discovered.

3. Job losses

4. Labour abuses

5. Quality control issues

6. Environment problems

7. Negative effects on the balance of trade

8. Job losses  Production department is usually being outsourced  The problem is that jobs are being lost  Skilled and semi skilled jobs are the biggest losses  Purchasing power disappears  Fewer people will train for such jobs  And valuable skill sets will be lost to the society because demand is reduced

9. Labour abuses  Labour abuses are very common in many poor countries  Outsourcing company can’t control “double outsourcing” is happening  Workers often have low wages and bad working environment  Child labour is also a problem

10. Quality control  Developing countries don’t have a good quality control system  Investors don’t care because they are focused on reducing expense  Workers are not educated and well equipped  Products may contain harmful materials

11. Environment problems  Host countries are too eager to accept the contract  This caused that they failed to enforce environment practices  Workers in the factories may often be working in a toxic environment  Local communities are also suffer from the environment hazards

12. Loss in the balance of trade  In past 15 years, the trade deficit has increased by 400 % in US  In Canada, the deficit of trade has touched the bottom in the previous 20 years.  North America, is increasingly not making product anymore.  We send the raw material to others and then buy well goods back.

13. In conclusion  In conclusion, offshore outsourcing is bad for both parties: investors and the developing countries.

14. Thanks for your time  Tommy Wu