A Careful Look At Offshoring

from the natural-progression dept

Yet another article that takes a look at the “offshoring trend”, but this one actually takes a step back to put the whole thing in perspective. From a historical vantage point, this trend doesn’t seem all that different that past trends where products made in the US were eventually outsourced. The article quotes Walter Mondale from twenty years ago, when he was worried about chip production going to Japan, saying: “What are our kids supposed to do? Sweep up around Japanese computers and sell McDonald’s hamburgers the rest of their lives?” Instead, what happened was that cheap chips resulted in a technology boom that certainly helped the US economy quite a bit over the next two decades. The article also points out what we’ve been saying here all along: the rush to outsource is a bit shortsighted for most companies. Those who are only looking at the salary aspect of it, don’t realize that there are many more costs involved, and many are already starting to regret the decision to outsource. However, in some areas, it clearly does make sense to outsource, but the number of jobs that will go overseas each year is a very very small number – and pales when compared to the number of jobs lost each year naturally through layoffs and company closings. Finally, the article points out that, when done right, offshoring is a net positive for our economy – and has been historically. This doesn’t mean that it doesn’t make life hard for some people who lost their jobs. However, instead of thinking up protectionist plans, the US should be making an effort to train these displaced employees for better jobs in sectors that need them.

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Comments on “A Careful Look At Offshoring”

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Peter F Bradshaw (user link) says:

A better analysis.

Intel may have managed to do well despite the loss of its market share but the US semiconductor business as a whole has not. There simply is no comparison between the semiconductor industry of the 1960s and 1970s, and that of todays.

A bigger question to ask is whether the US is a better country now than it was in the early 1980s. I think that there’s a strong argument that it is not. It seems to me that there has been a hollowing out of society caused by people being forced out of the middle class.

Articles that offer more insight are at:
The Rise Of India; and
Corporate America’s Silent Partner: India.

As these articles show R&D is being moved to India. In advanced engineering knowledge is power. And it is the PhDs that hold the knowlege – not the MBAs.

In the 1980s Intel was competing against Japanese companies. And it had somewhere to go – into microprocessors. Now it is US companies picking up stakes and moving countries. They may still have somewhere to go but why should they do it in the US?

Gregory Kennedy (user link) says:

Is the US better off?

This is absolutely a loaded question and there are many different ways to prove which ever side of the fence you’re on.

I happen to be an optimist and agreee with publications such as the Economist that have doccumented the fact that the avergae american consumer may not earn more now, but have 30% more buying power becasue the cost of goods so low due to overshoring.

I remember when I was a kid a TV, new clothes, or a stero where costly. Now these comodities retail for under $50 at Wal Mart.

I also think with social issues the US has made a lot of progress since the 80’s in areas such as gay rights or femminism. Of course there is more to be done, but female corporate leadership such as Meg Whitman or Carly Fiorina just did not exist in 1982.

My father lost his job and his career due to the innovation of the macintosh and the changes that occured in the publishing industry due to it. It was difficult for sometime, but he finally found his calling as a professor, teaching printing and design.

An optimistic outlook is what is required to view these changes as opportunities, and then take advantage of them

OldYeller says:

Re: Train for better jobs?

A fair point, but the reality for the last decade or so is that white collar professionals need to always be upping their skill sets or just plain reinventing themselves as their careers develop.
Anyone who wants to “just keep doing ‘x'” for a living indefinitely is either banking on their line of work not becoming a commodity, or just in denial. The danger in this mindset is that it treats a career path passively instead of accepting that, like it or not, we’re each responsible for actively doing our best to learn what the market needs, and finding a way to position ourselves accordingly.

Another voice says:

Re: Re: An still ...

No one talks about the absurd executive salaries or performance bonus that are kept around while the bottom line “looks” nicer with out sourcing.

Hey CFO! Want to save %20? Try asking yourself do you really need a multi-million dollar salary?

Granted this is a simplistic view however I would love to see a complete detailed picture behind the need to outsource, including all salaries, bad managment, wasted expenditures, cover ups and so on …

Anonymous Coward says:

Re: Re: Re: An still ...

If you just went back to school and have 30k in school loans to pay off, the last thing you want to see is that the job you retrained for is now only available in India.

How many times and how deep in debt must I go before corporate America thinks my skill set is adequate to provide me with a decent standard of living ?

Relatively cheap available goods doesn’t equate a good standard of living. It seems everyone is missing that point.

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