A Good Reason To Outsource

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There is a very simple reason for Major corporations to move overseas. The political climate in Washington is ANTI-business. It is a spend and TAX the rich and CORPORATIONS in America mindset (business is evil). Corporations are getting ahead of the curve and leaving while the getting is good. They see what is coming and want no part of it.

This is just the beginning of the Californiafication of the USA...one where business flees to more hostpitable business environments. The result for the American people is more unemployment, underemployment at lesser wages, cause all thosehigh paying jobs just left for India and China...let us just start thinking of America as a 3 RD world nation or a Banana Republic. For that is what this Democrat led government is going to lead us to.

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I am sorry if the truth hurts...I said long before the election that if the Dems get in they would Californiaforinicate the whole USA..Major corporatins have for years been moving out of CA.

Awhile ago I even saw a commerical sponsered by the State of Michigan that touted a business that moved from CA to Michigan.

[jyl]

There is "outsourcing" and there is "offshoring".

Outsourcing means hiring another company to perform certain work for you, instead of using your own employees. The types of work typically outsourced is information technology and backoffice accounting, HR, payroll, etc.

Even if you think an anti-business environment exists in the US, it applies the least of all to this sort of work. IT and HR folks can be fired at the drop of a hat, they don't make a ton of money, they are not unionized, OSHA doesn't have much of a role in their work, and so on.

Companies are not outsourcing because of an anti-business environment, they are doing it becauase they think they can save money by having someone else do it.

Offshoring is moving your company's operations overseas.

The primary reason for moving operations to low-cost countries is lower labor costs. An IBM programmer in India is much less expensive than one in the US. Is India more pro-business than the US? Not sure about that, but people there sure make a lot less money.

A secondary reason is to take advantage of tax holidays and havens overseas. Basically the company needs to set up operations in a low-tax country and arrange its internal cost accounting so that the majority of the value-add occurs in that low-tax country. Thus the company can arrange for its US operations to make relatively little profit. Profits are shifted to the overseas operations, where tax can be minimized via various strategies. Through tax strategies like this, the majority of US technology companies pay a very low corporate effective tax rate - typically 10% to 20%, in some cases 1% to 5%. Other industries, that cannot offshore, pay the full tax rate.

Then, there is "re-incorporating". This is where a company moves its headquarters and/or corporate domicile out of the US. It ceases to become a US company, and instead becomes a French, or Chinese, or Russian company that is doing business in the US.

Notice that you essentially never see this. (It was popular for awhile to re-incorporate in a tax haven country like the Bahamas, purely as a tax reduction strategy, but that's rare now.)

If the US really was such an anti-business country, you would see US companies flee the country and become French, Chinese, Russian, etc companies. Not happening.