StudioCash Luke

Is Outsourcing BAD for America and good for everyone else? How do you feel about Outsourcing?

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adultchica

It's good for the American consumer, BAD for all the employees getting axed for the sake of saving some $$$

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Over all it is bad.

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BeatingSkull

BAD!! how can i charge $50 for something that an outsource company will charge $30 for , & then keep $20 of it & pay $10 to whoever?

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StudioCash Luke

How big of a problem is outsourcing in terms of the world's economy?

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VeriSexy

Keeps down inflation but people loose their jobs too

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StuartD

Like most things... a little is ok, too much is bad for you.

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chaze

I think bad, poor people have to dom something why send it over sees.

There is plenty of minumum wage college kids and medium wage people ready for action here and customer like to speak the same language.

munki

Outsourcing will slowly destroy our local and national economy.

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flirty

i dont think it's gonna be bad as it seems. outsourcing has advantages too. it'll save you a lot from diff things, time & money.

you can take on extra or large orders your business couldn't handle before. This will expand your market share and you could also o.ffer to take the work your competition can't handle. you could also get end up receiving orders from your subcontractors. Your subcontractors may also tell other people about your business.

etc. etc.

u-Bob

just wait a few years and india will be outsourcing jobs to the usa

Serge Litehead

if it was disadvantageous for national economy, the goverment would be all over it with regulations.
of course it's hurting some pockets. you either have to learn how to provide cheaper services or take by quality.

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BlackCrayon

outsourcing is todays version of colonization. these companies come into these poor countries, pay their employees shit (even if it might be better than what they are used to) and once the poor countries citizens get a bit of money, and want more money, they move on to the next poor country. its exploitation really. how is anyone going to be able to buy anything if every is outsourced to other countries? people won't have the kind of incomes they once had and won't be able to buy these foreign produced products. in adult, its not much different. you're putting american designers out of work, you're reducing their income because they are forced to offer cheaper rates to compete. i hate outsourcing.

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BlackCrayon

the only reason they don't is because these huge corporations save and make a lot of money outsourcing, and we all know they donate a lot of money to presidential campaigns, amoung others.

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warlock5

Everyone who has posted in this thread so far needs to read this article: http://www.mises.org/story/1699

clickhappy

Outsourcing is good for america because companies can hire 10 indian low level tech support people for the cost of 1 low level american tech support person.

This puts more money into the company's pocket and helps the company survive and grow.
When they grow they pay more taxes, and they hire more americans to do higher level work.

So outsourcing is good for america and american companies, it's just not politically correct to say so.

Mr. Mojo Risin

outsourcing sucks

Mr. Mojo Risin

Is losing 50 percent of the manufacturing base since Bush has been president bad?

BlackCrayon

what are those 'low level' american employees supposed to do? go on welfare? try to go back to school while supporting a family at the same time? work at mcdonalds? i can see outsourcing making the middle class a thing of past, the have and the have nots. to me outsourcing might look good in numbers but when you look at the actual people it effects, its not so pretty.

also, people need to take a look at how the american worked used to be treated. working 16 hour days or be fired, wages so low they couldn't afford anything...america was made great by paying employees enough money so they can live well and put money back into the economy. seems like outsourcing does just the opposite.

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Webby

Probably more so for the US than other countries simply because the US has developed into a consumer nation with a very weak manufacting base or service industry that can be exported.

Example is wheat and arms trading. At last look these were the only two elements of the US economy that actually had a surplus benefit to the country. All other industry were, one way or other, just consuming either parts, services, plant or whatever from other nations to a level more than their capability to export finished product or plant.

When it reaches a point of now exporting labor for the sake of a cheap price - it's probably the ultimate in cheapo consumerism.

At some point there is a bill to pay for this and a high one for the whole nation in that it's simply not sustainable to spend more than can be earned and constantly (especially lately) live off the "national credit card".

The US is not alone on this - it's a problem with other nations as well, but perhaps not to the same degree.

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Ace_luffy

actually outsourcing staff is good for the businessowner who wat save more expenses but in the other side more unemployed people will be specially in the 1st country like US and Canada

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High Plains Drifter

I know that outsourcing for development will usually end in failure. I'm talking large software development here, not web applications. Problems with communication, cultural differences, and physical locations are insurmountable obstacles. If you're seriously thinking of outsourcing on a large scale, take a look at the case studies of other projects (I don't know if the Yahoo failures have been published, but look for those). If NDs weren't an issue, I could give examples of numerous companies that tried to save a buck and ended up losing millions on outsourcing software development.

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Stamen

Depends on how you look at it, the immediate effect is bad for America because it means we are losing jobs right now, our goods are cheaper, but if you have no money to buy them, it's a wash.

The longterm effect is good for America, because we build trade in other countries which boosts our overall economic efficiency, and develops a dependency on our goods (and the ability to pay for them) in their country, which means that businesses need to expand to fill the new demand, and the expansion happens in America.

The ultimate result is you get another Canada, instead of another Mexico.

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rickholio

I don't see how exporting work to other countries builds trade. Efficiency, yes, sure, but "productivity" (ie. more work out of less people) is already cutting job availability in most sectors that aren't service-related.

Outsourcing will pushes the economy to a state some call the 'Wal*martization' of the country... where only rich individuals and huge megacorps can afford to buy anything substantial, and sell rock bottom priced crap to people who can only afford to buy rock bottom priced crap because the good jobs have been outsourced and they have to work at wal*mart; where wages are shit but it's the only thing around and you *have* to work there 'cuz the CC's are maxxed and there's no more cash in the savings account.

Outsourcing is a race to the bottom. Don't think that your country (whichever country you're in while reading this) is immune, either... money has no patriotism.

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rickholio

I should qualify that.

When you send money to a country, and goods come back, yes, that's an increase in trade, but purely one way and only for the benefit of the upper echelons at the expense of the lower echelons in the outsourcing country.

Outsourcing does nothing to increase return trade aside from provide a little more capital. China may be buying more cars from the US, but do you think the value of those cars comes anywhere remotely close to that of the massive bulk of t-shirts, plastic flags, electronic doohickeys and so forth that flood in the other direction as a result of offshoring the work to produce them?

It'd be interesting to see the numbers, but a little common sense shows that the chinese win, the multinationals win, but anyone who was too poor to afford college is fuct out of another job, and must get thee hence to a wal*mart.

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BoNgHiTtA

Yes, very good article. Outsourcing makes other countries able to trade with us, inturn strengthening our own economy. If we can produce a widget at 5.00, and another country can at 3, we will consume widgets at 3 dollars, diminishing our own ability to sell widgets for 5. However, as the other country gains from the sale of widgets, there economy will strenghten, and the cost to make widgests will rise. Eventually (though maybe not in our life), this country will no longer be able to make widgets at below our cost, and we will begin to make widgets again.

Allowing other countries to gain money only helps us in the long run. But people don't like the 'short' run.

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BRISK

I don't think of outsourcing as being either good or bad for a country. I think of outsourcing as an inevitable reality, so debating the pros and cons doesn't accomplish much.

Outsourcing is reality, it's not a fad, it's the present and the future. This is the world we live in now, so you better learn to offer something of value. Sitting around complaining that you lost your $80,000 a year programming job to a $20,000 a year Indian person isn't going to get you anything. You have no right to a job, you only have the right to compete for one, and now you compete globally.

People would be wise to spend less time complaining about outsourcing, and more time thinking about how they can use it as an opportunity.

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rickholio

It depends on your definition of 'us'.

That article quite rightly points out that outsourcing helps the companies that do the outsourcing, but people who need jobs are SOL. It tries to mitigate that fact by claiming that grannies with mutual funds will make more money if they're invested in those outsourcing companies, but the gains for them are going to be paltry indeed compared to the corp's principals who'll be taking down huge salaries, bonuses and dividends.

What outsourcing does, in effect, is suck out the money and jobs that has traditionally been used to prop up the middle class over here on the north american continent, pour some of it into another country and send the rest to the outsourcers. This is a very, very favorable situation if you're one of those neo robber barons that's making a killing off the scheme, but if you're a work-a-day stiff, or in an industry that depends on work-a-days to make your profit (say, for instance, the adult industry) it's not a good thing at all.

The only way the scenario finally comes to a stop is when the barriers to producing goods overseas equalize with the cost savings of sending them over. There's a long, long way to fall before that happens... I suspect that the end of cheap oil/energy will arrive, and be the expense that will push the equation back in the other direction. High shipping costs will incentivize local production, but there's much weaker barriers to moving non-local services over, ie the wholesale outsourcing of some company's bookkeeping or payroll services.

I could also foresee a popular uprising against continued outsourcing. The average joe on the street couldn't give a rats ass about 'protectionism' being a bad thing if he's struggling to keep a family of 4 alive with $3/gal gas and a wage constantly being down-pressured due to "those damn chinks". Governments have been known to topple for less.

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BRISK

An article worth reading:

http://www.foreignaffairs.org/200405...-bogeyman.html

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Stamen

You assume that we aren't exporting anything else.

What happens now is that your average Indian citizen can't afford to buy something made in the USA, but you increase their wealth and style of living and suddenly they want to buy that USA-made item.

Not only that, but businesses in India may suddenly find that it's cheaper to make something in the USA because we are more efficient at making that product, and so they decide to hire an American company who suddenly grows and needs to hire more people.

Thats just 2 cases where a USA company is suddenly in need of more American workers to meet demand from a new market that didn't exist previously.

As for the "Wal-Martization", you are right, in the short term a few more people will be shopping at Wal-Mart. But the expansion companies (mostly small businesses) will make due to the extra capital will create more jobs that outsourcing can't fill.

Don't blow the problem out of proportion either, not every job is going overseas, and the only people that will really be affected by this are people working in certain industries who are unwilling to re-tool and get another job. I liken it to when Microsoft networking overtook Novell networking, all the Novell certified people suddenly found themselves without a job. Thats a market change, and that shit happens, now did those people suffer greatly because of it? Of course, but you don't hear from the ones who saddled up and re-tooled, got themselves an MSCE certification and got their job back (or never lost it in the first place). You hear from the ones who were so set in their ways that all they thought to do was piss and moan about how evil Microsoft is.

That said, I think there should be a Government program in place to financially help and retrain workers displaced by outsourcing, remember economics doesn't treat people "fairly", people do.

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rickholio

Or read the executive summary:

"Outsourcing hasn't killed jobs, or at least not enough to matter. It's just that everyone is doing their jobs so much better now that they don't need you any more, and it's that darned old bad economy what's leaving you out in the street with empty pockets. Shame that you poor unemployed bastard have to be the sacraficial lamb, cuz protectionism would be EVER so much worse and you're a reactionary idiot who ignores statistical evidence if you complain about it. If you hurry, they might toss you one of the greeter jobs at Wal*Mart while you wait on the trickle down. It's the new economy, stupid. New jobs and new industries are just around the corner, then it'll be milk and honey for all. So just sit there and suck it up, cuz if you even DARE try to protect your job, you'll be fucking yourself and your whole country harder."

While the article takes a birds-eye view and tosses in a few statistics to back up the point, noticable are the lack of some vary salient points:

- In the last 5 years, there has been a total gain of a little over 1.4 million jobs. A large portion (around 1/3rd) of those are construction-related, which can't be expected to continue when the white-hot real estate market cools (already happening in many cities).

- The bulk of the rest of the new jobs come in the service and health industries. Service, meaning "Wal*mart" or "McDonalds", are the lowest wages you'll find.

- Massive loses in the manufacturing sector, to the tune of some 6-odd million jobs lost. These are (were) jobs that people who didn't have the chance to get a degree could obtain and have a reasonable expectation of keeping a family alive on.

- In all cases, the median salary of the new positions are substantially lower than the old positions lost. Average salaries increased only 1% (adjusted for base inflation) over the last 5 years and ,edian salaries have sank substantially. This all happened while everyday *real* costs, like gas, medical, insurance, heating fuels have jumped dramatically (like a 130%+ hike in natural gas heating costs this year... yikes! NG heaters better hope for a warm winter this year!)

- Despite the 'unemployment rate' being at or near all time lows, there are fewer people working. "Utilization" is down to its lowest level since the late 80s, meaning more people looking for fewer jobs. "Unemployment rate" is really a misnomer, and a pretty meaningless metric for joe everyman (except when used as a PR technique to 'spin' away other bad economic indicators, like all-time low consumer confidence, increases in loan defaults and personal bankruptcy claims, etc)

In other words, there's little to no recognition that a great swath of the workplace is in serious financial straits, building to a cresendo potentially unlike anything seen since the late 20s (except this time, with no wartime economy and free flowing barrels of cheap energy springing out of the ground everywhere you step).

I used to read the magazine version of Foreign Affairs up until around the start of Gulf II, where there was a never-ending series of hagiographies and best-case scenario predictions that made it obvious, to me at least, that they'd drank the neocon kool-aid and were moving down the inevitable path of being shills first, editorialists second.

I will agree with the points raised about subsidies and their unintended consequences though (ie. sugar, steel, et al) and I've said the same things myself for years. And they did go the extra mile in making a couple suggestions of how to ameliorate some of the pain of the 'displaced worker' (their term), although considering how out-of-character with the rest of the article that little snippit of socialism was, I suspect a copy editor had it wedged in at the last moment.

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com

having worked in IT my entire career, and having dealt with outsourced staff for a vast portion of that time all I can say is this, depending on how you utilize overseas talent, it can be very benificial, or even more so detrimental to your day to day operations and/or long term projects. For an example, the Union employed folk were among the first to be hit by the outsourced program... to be completely honest with you, I don't necisarily disaggree with the Unions, but if you break the situation down logically... why pay somone $25 an hour to bolt car parts together at half effort, where you could pay someone overseas half as much (if that), to do a better job than your local staff? now granted, communications between your company and the outsourced company will fluxuate depending on your chosen path, but, if you go with the right outsourced company, you do have a good probability of receiving comperable work, at a fraction of the cost.

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Stamen

Ok, so how do you feel protectionism fixes this?

And this particular stance on outsourcing has nothing to do with being a neo-con, I'm a registered Democrat, but like I said before, economics doesn't treat people fairly, people do.

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Theo

It's good, all jobs need to be outsourced so more americans will experience the american dream. Never working LOL

AlienQ - BANNED FOR LIFE

The less consumers make the less they spend.

Pretty simple math to figure out how bad it is in the USA.

It is even worse when...
people are unemployed or underpaid consumer that is facing rising costs accross the board from electricity to food to Medical to beyond.

Fast food jobs and Walmart jobs are not job's it is borderline corporate slavery.

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flashfreak

globalization.

you like it or not outsourcing will continue to rise

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rickholio

Can you identify a US-made item that is in hot demand in India? I can think of cars, but that's about it.

If you're talking about pumping money out of the middle class on this side of the water across the pond to build one over there, then yes, eventually you'll reach a steady state. Assuming that those companies in india will stay in india and not simply open yet another new branch in, say, kazakhstan or mozambique or uruguay when the average indian salary gets "too high".

The two main things involved in producing any goods are labour and materials. Labour in india has a LONG way to go before it'll be cheaper to hire americans, and I daresay there's very little that can be purchased in the US that isn't cheaper to source elsewhere on the open market.

The people who are rah-rahing this move are explicit in saying that they want the US to move heavily to a 'service economy'. The FT article posted earlier claims that 'big gains are being made in the mortgage brokering sector', with the implication that where all the new jobs are going to be made is for people to become actuarials and pencil pushers, hollowing out manufacturing even more to countries with cheap-ne-slave labour.

Anyone who has read Gulliver's Travels will recognize Morlocks and Eloi by any other name. I hold no great expectation that these new 'sevice sector' jobs wouldn't also immediately be outsourced in turn as well... there's nothing unique, or even special, about a north american resident's educational or societal upbringing that makes them a more efficient mortgage broker.

Well, two POTENTIAL cases. It's a pretty long stretch from the potential to the reality... and aside from the odd snarky comment, I've yet to hear of a single job outsourced from china or india to the western hemisphere (although apparently Japan has done a number of them to Brazil).

And working. Don't forget working. The working part is far more important than the shopping part, really... as wal*mart has become the lowest common denominator for employment. You can't get worse than wal*mart, because if you were in a job that's worse (hard to imagine, but I suspect it exists), you could always quit and go to wal*mart. That, of itself, wouldn't necessarily be a bad thing if an individual could survive on a wal*mart income, but I double-dog-dare someone try to survive alone, let alone raise a family, on the 34hr/wk at $5.25hr they pay in anywhere but the most meagre of low-rent subsistance levels.

That's where you're wrong. The people that are well and truly fucked are the people who are 'unwilling' (or perhaps unable, what with being put into the poorhouse due to half a decade of crap economy and now unemployment due to outsourcing). But EVERYONE gets affected by this, because with each passing day, a new way to outsource a new job to a lower-cost labour market comes online, pushing down on salaries at the same time costs are going up. The entire labour market gets squeezed by this. Some can, of course, absorb that shock better than others... but there's a vast, vast community of people who are just getting by that are being pushed right into indentured servitude at this very moment. Due to more factors than just outsourcing, of course, but it sure as hell doesn't help.

Which is all well and fine for fat, well-paid former novell networking people who could retool at minimal expense into other jobs in the same industry. It's considerably more difficult for someone who's learned to use a metal press and arc welder all their working life to suddenly "retool" and become actuarials and mortgage brokers. Not only do you have the enormous barriers in education costs and available funds (and seats in schools!) but you also have the "working for a living" blue-collar vs. "3 martini swilling lunchbreak" white-collar cultural issues. Expecting these people to just magically retool and overcome is ludicrous. Of course, it's these unfortunates that every pundit tacticly admits to when they say "there'll be some pain involved."

Never happen. Commie.

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rickholio

I don't. Protectionism is generally bad, although there are areas where CONTROLLED trade is useful. I certainly don't recommend it as a panacea. The snark in my 'executive summary' is mostly just mocking the FA article's attitude of "Keep moving, nothing to see here" which really does noone any good.

There's lots of things that COULD be done, but they're all "commie" things.

Stuff like seriously improving public education so that even the poor kids stand a reasonable shot at busting into the "new economy". Noone with an IQ of 150 should have to purge propane tanks at $5.25 an hour, but god only knows how many are out there doing that due to being born into unfavorable circumstances. It's a double shame, because those people are denied the ability to reach their full potential, and we're denied the benefits of their productivity and ingenuity.

Things like re-funding grants to post-secondary education, which have been ruthlessly pilfered to spend elsewhere (pick a wastrel spending program of your choice) and offering incentives to help get people 'retooled'.

Things like stopping governmental incentive to outsource. Right now there's serious financial advantages to keeping capital circulating and hiring people outside the country. Close the loopholes.

Things like finding ways to have these huge multinationals put back at least SOME of the money extracted in the whole outsourcing endeavour. Even if that means INCREASING TAXES. This, of course, will never happen... money has no patriotism, and if Microsoft can save 'n' billion a year by moving its head office to senegal, sure as fuck they're going to do it... but perhaps there are things what can be done.

Just a few suggestions off the top of my head.

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BRISK

IMO, one of the biggest problems with the topic of outsourcing in the wealthy countries of the world is that people seem to think they're entitled to a job at a high salary. You studied computer science at university for 4 years and got your degree, so naturally you have a right to a well paying job, right? Wrong, you're not entitled to anything, you're simply part of a market which is now global.

I don't know whether outsourcing is good or bad for America (or any other rich country), but I do know that it's bad for arrogant people who think they're entitled to a job at a high salary.

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BRISK

I agree. Investing in education should be every nation's biggest priority.

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poorwebmaster

BAD BAD BAD - Outsourcing is geared toward high end jobs like programming and tax prep/CPA.

Those outsource bastards want us all to work low end paying jobs - if they can get away with it, those fuckers will do it.

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Stamen

Like I said, the average person in India is too poor right now to purchase our goods. Thats changing now, and in the last 2 years India's non-oil imports have raised by more then 30% per year.

And as far as things being cheaper to make here in the USA, Japan and Europe send alot of things over to the USA because we are more efficient at pumping them out. For example, in India the average worker may be able to make 5 widgets a day, but here in America, the same worker on a more efficient machine can pump out 50 widgets a day.

I can afford to pay 10x as much for the American worker, because I'm getting 10x the product daily.

So this "potential" is reality... it is what has happened and what is happening.

And for you to insinuate that these people affected by outsourcing end up working at Wal-Mart is ridiculous. Like you said, Wal-Mart is as low as you go, but its also a long way down with many stops along the way if you are eager to work. And Wal-Mart was growing and people were working there on shitty wages long before outsourcing was an issue, but thats a whole other bag of worms.

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Theo

that's not enough. By the time the average indian person will be in position to afford the good of west we will not be around

unless you have plans to live for 200years

ServerGenius

I don't give 1 flying fuck about what's good for my country......since my
country doesn't give a fuck about what's good for me either....If it's good
for me and my loved ones...then that's what I'll do. History has proven time
after time that that's what politics do aswell....so why can't I?

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Theo

good post dynaspain

ServerGenius

Thanks Soul_Rebel

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Stamen

I agree that the education system should be improved greatly, and funded better, but unrealized potential due to unfavorable circumstances has affected the entire world since the beginning of time, and that has nothing to do with outsourcing.

And the only regulation I would put on the companies who choose to outsource is that they provide the same benefits (medical, retirement, etc) to their outsourced workers that they would to their American workers (this should include any outsourcing companies that choose to do business in America).

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Stamen

There are McDonalds in India... isn't that one of our unaffordable "goods of the west". You think that an increase in money to Indian civilians doesn't increase the profits of McDonalds there?

The surge in imports to India will just make it a more attractive place for USA exporters to sell in, which means Indian money will be flowing into the USA.

And in the end, America has a lot more to offer India then India has to offer us...

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rickholio

There's no doubt that some of India's inhabitants are getting richer. That wasn't the point... the point is that the average indian salary (and indeed, the cost of living) are so much lower as to make the equalization path take on epic proportions, and that India is only one country among many that could be outsourced to. In fact, there are rumblings from people IN INDIA about people worrying that those new jobs will be further outsourced to even poorer countries (although I suspect such rumors to be injected into the work force to keep people dutifully grateful to be employed, etc).

I'd love to see a citation of this. Not saying that I don't believe you, but I've never come across anything that says a worker in the US is 10x more efficient than a worker in Europe due to some magical machine (that could be duplicated) or some special training (that could be exported). I'll assume that 10x is hyperbole for demonstration purposes... but I'd still like to see a citation where widgets are being produced in the US over, say, china... and why. I suspect in many of those cases, it's simply because it minimizes shipping costs. If so, then that's in line with what I predicted in an earlier posting: That oppressive shipping costs bourne of increased price in fuel will help equalize that pressure.

Quite a number of them will. Quite a number of them ARE. Have you looked at how many people wal*mart employs, lately? It's probably unknowable how many of those people have once had more useful, gainful employment... but I know at least 3 people offhand who've been forced to go down that road in recent times.

Yet I'm not saying that there's an absolute guarantee that an outsourced job equates to 2 new wal*mart employees ('cuz the wife, who had the luxury of tending to the homestead has been forced into the workplace to fight for her $172/wk net). I said that this inevitably leads to the <b>Wal*martization of the economy</B>, because the very nature of the movement of capital and labor in outsourcing syphons cash from the middle class (in jobs) and lower class (that buy the cheap product) to give to the outsourcees (in jobs, albiet low paying by our standards) and the corporation (and thence to the directors and boardmembers, in enormous bonuses and salaries).

Taken to its logical extreme, given a perfectly mobile workforce and a perfectly accessable market, the world would eventually 'settle out' into 2 strata... for which I borrowed from H.G.Wells' concept of the Morlocks and Eloi (and incorrectly attributed to Johnathon Swift. Bad me!) of a huge underclass toiling away purely to service the upper echelons. Of course in The Time Machine, the Eloi end up literally being lunch for the morlocks, not an unheard of consequence when one risks alienating a much larger (and angrier!) population for your own mean benefits.

My assertion is that this "Gods and Clods" scenario is bad for the planet as a whole, yet that's the direction we're moving in for lack of sufficient counterbalance so long as men with power consider Mammon and the gospel of Milton more important to please than the people they hold sway over.

For the record, if it HAS to end up this way, I sure as fuck don't want to be a Morlock, and I don't intend to be.

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GregE

Let me see if I got this right.

You spend four years learning "high tech" skills in a college somewhere, you're now in debt up to your ears with student loans and you've just found out that your degree is essentially worthless in today's economy.

Call it arrogance if you want, but I think I just might be a little pissed off too.

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