Offshoring and outsourcing
What would it take to show that outsourcing (the common misnomer for what should actually be called offshoring) is not a danger to the U.S., its workers, or its economy?
What if, in spite of increased offshoring, the unemployment rate went down, the total number of jobs went up, the GDP went up, and the average wage went up?
Now, I know that statistics never tell the whole story. I think that there has been a lot of backlash against outsourcing: not necessarily because “DEY TOOK ER JERBS”, but because “I can’t understand what this Dell rep on the phone is saying to me.” However, not every offshored job was a call center job. Offshoring makes a lot of sense if various barriers (practical ones: time zones, distance, language, etc) aren’t an issue or can be mitigated. The wisdom of outsourcing is almost undebateable: the only issue of contention was the “giant sucking sound” of offshoring to other countries. Enter Ross Perot, Michael Moore, Pat Buchanan, etc ad nauseum saying something to the effect of: Evil CEO Wadsworth T. Moneybags trying to save a buck so he can buy an extra-large yacht at the expense of the hardworking pariah Joe Q. Bluecollar.
Exploitative class warfare and anecdotal evidence aside, whether their attempts at isolationism were well-intentioned and/or foolish, the disastrous loss of jerbs and damage to the economy hasn’t come. In spite of the dot-com bubble, in spite of terrorist attacks, in spite of the Iraq war, in spite of [insert person or event you hate here].
The panic-based arguments about India aren’t new, of course. NAFTA was Ross Perot’s nemesis, from hence the “giant sucking sound” was coined. Japan was the devil from the far east, rising up to destroy U.S. car manufacturers in revenge for the A-bomb. Neither country has destroyed the U.S. economy yet, despite legions of doom-sayers.
In the meantime, India has gone from a third-world country to an emerging capitalist force. Japan’s operations and management techniques hurt U.S. car companies because of their unwillingness to compete. But in the end, they have improved efficiency, productivity, and innovation all over the world. Mexico…well…they can’t all be winners I guess. Though a less corrupt government might help things out there.
To be clear though, not everything can (or should) be outsourced (or offshored). Just because Company A outsources their trucking or catering, doesn’t mean it’s the best thing for Company B to do. Since offshoring is just a different version of outsourcing, the same holds true. But would you pay $50 for a $10 bill? Companies aren’t charities (at least, not for long): if they see a good opportunity to reduce costs, why wouldn’t they take it?
Sources: The Futurist, U.S. Dept of Labor
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The issue looks great on paper, but for this country to move the next level, we must add quality jobs. Its great that the wage goes up, but when those jobs that are being added don’t include health care, its easier for an employee to offer more money to an employee. The jobs that are being added are more part-time jobs, no healthcare, and in some cases no overtime. Add on top of that more and more companies that have decided to stop or renegg on the retirement packages, what do you get, higher wages.
So on paper its looks fine and dandy, but lets not forget the trade off that people meet when looking for a job.
I agree. If slavery were legal, a company would be stupid for not taking advantage of it.
I think most people are just upset when their particular job is offshored, or in danger of being offshored. It’s an inconvenience at least, and can be a major change to re-skill and re-tool yourself for a new job. It’s not that jobs aren’t necessarily available, but a lot of areas that are based on one job (e.g., steel) and we start importing more or offshoring the jobs, it affects that area and those people greatly even if the country as a whole improves. The solution is, of course, that those people need to adapt — get a new skill set and get back into the workforce, but I think that’s easier said than done.
I think Sithlet brings up a great point. No one likes to lose their job, but should the government always step in to prevent job loss? I don’t think anyone has a *right* to a job, or health care, or overtime, etc. To me, freedom includes the freedom to fail. Like I said, the intentions might be good, but in reality it just doesn’t make sense.
Also I don’t think slavery is a fair analogy.
I don’t see a problem with it at all. Except, of course, for the language barrier issues when it comes to the specific area of call centers. But, often, the Indian Dell representatives speak better English than most Americans. If you can get past the accent. Which I can.
Offshoring, Outsourcing, what have you, it’s all part and parcel of capitalism. If it is a sound business decision, and you are offered something you can not get in the U.S., you should act on it. Otherwise you are fiscally irresponsible.
And Jonny, though I see where you are coming from, I think your point is a little dramatic. Slavery is a morally unethical concept. Hiring a call center in India to handle your calls at a more reasonable price is a sound business decision. Slavery is a reprehensible act. Your comment would make sense when referring to people outsourcing their labor to sweatshops with child laborers, but not for the majority of outsourcing. And US companies do not benefit from working with sweatshops and such, because the public outcry when such a connection is discovered outweighs any financial benefit.
All this does is force the US to learn how to compete better in the global economy. How much has been outsourced to the US from abroad in the past? We never had issues with taking work from other countries, so it’s a little hypocritical to have issues with giving our work to other countries.
Either we think globally, and do business in that fashion, or we close our borders to the world. You can’t pick and choose which parts of the global economy you want and which ones you don’t. It’s all part of the same package.
Mgroves, I agree with everything you said except your last comment. But only the part about health care. I think everyone does have a right to health care. But that’s only because I’m a bleeding heart Independent.
P.S. – My comments are always too long (i.e. over the 1000 character limit). I need something to tell me how many characters I have typed, because I can never gauge it well.
I’ll rephrase what I mean about health care, even though you will probably still disagree: everyone should have the right and opportunity to purchase health care from the market, but “free” health care is not a right and shouldn’t be a right: it infringes on someone else’s property. Equality of opportunity, not equality of outcome.
As for the comment limit: yeah it’s a problem. I’ll work on something.
It’s only a problem for me, I reckon, as I like to go on and on and on about things.
Yeah, M, you’re right. You and I disagree (go figure!) on Health Care. I’m for socialized health care and education, as I think it’s every child’s right to be healthy and educated. I think it’s not only the right thing to do, but financially sound for our country.
A better educated, healthier workforce will only make for a stronger economy in my opinion. But, I think this is one of those things you and I have to “agree to disagree” on, eh?
I don’t disagree that children (especially the sad orphans with hurt puppies) should be healthy and educated. I just disagree about the method. I think socialism (or any planned economy) is worse at distributing scarce resources than a competitive market, and I think there’s plenty of evidence (theoretical and historical) to show that.
Also, you aren’t the first to have problems with the comment limit. I’m not exactly sure I need it anymore, what with Akismet and all…
I meant the option to pay for health insurance through your employer, they pay out the nose for that luxury, and when they dont offer it, they can pay employees more.
Matt Matt, here we go again with your ellistest (spelling) attitude. Can you medicate yourself? No I cant not (dont give the go be a doctor crap) so you must depend on other people that are smarter, maybe in a better position to get those jobs. Yes I know anyone can do anything but that is not the norm in life. Anyways your a doctor, or HMO and you get to decided how much me living costs. I thought I had the right to live? Guess not, free health care? No but should the government dictate how far costs go. yes, now you will say that medience is a business and MY LIVING is not for others to make money. There has to be a equal somewhere. Now as for moving away when jobs dry up. You talk like its so easy, lets say I live in small town america. A big company sets up shop in my town and creates 1000′s of jobs.
Now say people move in and set up their lives and depend on these jobs. 1000′s of families depend on these (factory, steel US NORMAL PEOPLE JOBS) Now said company moves out and all these famileis lose everything. You say to just reeducate and move HAHAHHAHAHA I have 3 kids a mortage, WHERE DO I GO?? Im just getting by to support my family and everything is taken out from under me. This isnt 1850 when I can just set up shop anywhere and have a farm. People depend on good jobs in small towns. Plain and simple
If Mike’s Steel Co. has a choice between moving overseas or staying in the U.S. and going out of business, which one should they take?
Yes, there has to be an equal somewhere, but the fact is that life sucks: there is not enough money, health care, jobs, etc, to satisfy everyone’s demand. These are all scarce resources, which means that there isn’t enough to go around. It’s a fact of existence, and it sucks.
But I think the “equal somewhere” conditions are best brought about by the market, not a government dictate: The market does not promise *perfect* outcomes, it just produces *optimal* outcomes.
I’m not saying the market always delivers the most optimal outcome (it almost never does), but government fiat to dictate prices and consumption is far, far worse.