Raised prices have become an unexpected result of American businesses outsourcing.

Alongside the typical concerns about outsourcing, or hiring cheap labor outside of America, being a point of job loss for Americans, it can also be detrimental to consumers, said Frank Liu, assistant professor of business administration, who led a study on the effects of outsourcing.

Liu was curious about this topic because he said outsourcing is steadily becoming used by more companies. He was interested in learning of any effects caused by outsourcing that may not be seen on the surface.

“Many companies in the United States have shifted their production to other companies. People wonder, ‘What will be the effects of outsourcing?’” Liu said.

He learned that outsourcing can hurt society in two ways: it results in job loss for workers and in consumers paying higher prices than they should. Because outsourcing is supposed to lower prices, Liu said he set to find out why the opposite was happening.

His research, which began in 2007, focuses on the consumers, not workers’ jobs. Liu said his main question was: how does outsourcing affect the wallets of consumers?

Outsourcing does lower production cost, but consumers may not reap the benefits, he said. Firms outsource to retain customers, which is done by keeping prices low. However, Liu said he found that consumers may not be getting all the benefits that companies receive. The companies do not always pass along the cheaper prices they pull off by outsourcing.

“You’re taking advantage of more desperate people, to pocket your own money,” said Beanz Ramirez, junior in FAA. “I don’t think you’re as concerned about the survival of your business in that scenario. I think that reflects that you’re concerned about making more money for yourself.”

This unfair distribution of pricing caused by outsourcing can have a widespread negative effect on consumers, Liu said.

“Losing jobs is bad, but hurting consumers is worse, because that would include everybody,” Liu said.

Employees and consumers alike are now feeling the effects of outsourcing.

“As an engineering student, I’m worried about my job security,” said David Bruk, sophomore in Engineering.

Outsourcing also causes competition between firms to dwindle.

“After outsourcing, firms may lose the incentive to compete head-to-head, simply because more players are in the game now,” Liu said. “The same time you lose your job is the same time competition among firms will be softened.”

Companies do not compete intensely as they once had, which has negative effects on the economy. We should protect consumers by intensifying corporate competition, Liu said.

“The big question is ‘can a business survive if they don’t outsource?’” Ramirez said. “Good or bad? I think it’s relative.”

Liu said his results followed his line of thought.

“It’s not surprising to me. Basically my hypothesis was confirmed,” he said. “The study sends an alarming message to our public policy makers. They need to be clear about the negative effects of outsourcing.”