Could 2010 Bring More Job Losses Via Outsourcing?

December 9th, 2009 by Reed Allmand

Neiman Marcus has announced that retail store sales dropped a staggering 7.5 percent in November.  In an effort to cut costs, the company is implementing job losses and outsourcing its information technology department.  New jobs will go India.  Is this a trend?  As job losses mount and the recession clamps down on consumer spending, many large companies (and some small companies) are turning to foreign workers to find cheap labor, leaving many American workers unemployed for a longer stretch of time.

Since January, Neiman Marcus has had three layoffs totaling 950 jobs, and employees have taken pay cuts. The job cuts are part of an ongoing review “to improve service, reduce costs and improve our competitive position,” said Ginger Reeder, vice president of corporate communications.

But how beneficial will outsourcing be to workers who are unable to find new jobs after a job loss?  While outsourcing jobs overseas may benefit the balance sheets of companies in the short-term, the long-term effect on American workers is extremely negative.  Once a job is outsourced to a foreign country, it has a minimal chance of returning to these shores and providing work for those workers who are unemployed. Unfortunately for workers who have suffered a job loss, outsourcing may become more common as companies are faced with cutting critical positions that are necessary to the operations of the business.  Instead of cutting the position, many companies may choose to cut the American worker and reassign the job to an overseas employee.  For unemployed Americans, the development of an outsourcing trend during this recession could lengthen their stay on the unemployment rolls and make their reentry into the workforce more difficult.