A Thorough Look At The Real Issues Around Offshoring

from the worth-reading dept

There has been a pretty constant flow of stories about offshoring over the last few months – and while I’ve posted some here, I’ve been avoiding the stories over the last few weeks that haven’t said much new. However, mhh has submitted this long, but absolutely worth reading article written by Daniel Drezner taking a very thorough look at all the issues associated with offshoring. He basically makes all the points I’ve been trying to make here, but does it much better, and backs it up with plenty of research. The kneejerk response is going to be for people to post anti-offshoring comments beneath this post, but I’d ask you to actually read the article first and think about what it’s saying. The quick summary is that the direct impact of offshoring is much less than people make it out to be. The upsides of offshoring greatly outweigh the downsides. Protectionists policies make things much worse, and actually accelerate the problems people think are caused by offshoring. As for what we should do – there are three areas to focus on: (1) making sure companies understand the true costs of offshoring (and that they’re higher than they seem at first) (2) making sure we have programs in place to help those directly impacted by offshoring and (3) making sure politicians don’t take the “easy” political response, which will cause a lot more harm to the people they’re trying to help. Read the full article, though, no matter how you feel about the issue.

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Comments on “A Thorough Look At The Real Issues Around Offshoring”

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maxx says:

off shoring

I have several educated friends who have lost their jobs to slave wage offshoring. Some may lose their houses,others cannot contribute to the economy. I’m sorry, all the twisted logic in the world cannot convince me that offshoring benefits the educated American. It only benefits the New World Order executive who probably lives in several countries.

Maxx says:

Re: off shoring

Will Burger King pay my computer Analist friend 150K a year to flip burgers? Again offshoring benefits the extreme elite, while destroying the middle class. Show my unemployed friends how it benefits them. What counts are results, and the results of offshoring are immediatly evident;they are bad, plain and simple-(at least for an American.)

Anonymous Coward says:

Re: Outlaw Capitalism

I had several educated friends who lost their jobs to domestic competition. Some may lose their houses.

Competition should be outlawed. Look at all the jobs that are lost when one company loses sales to another. The company may go out of business, throwing people out of work.

We should have an economy that gives each according to their needs, and each should give according to their ability. New companies should not be allowed to be form if their is another company already doing that business. Companies should be required to hire, but never fire people. This way, Maxx won’t have any friends who ever have to worry about losing their jobs again.

Mike says:

Re: Re: Outlaw Capitalism

What’s really interesting to me is how few of Americans are truly willing to change their personal lifestyle in response to offshoring. When offshore labor was just blue-collar workers, we were all willing to stock up on cheaper clothing, cheaper cars, oodles of technology, etc. In fact, when you think about it, it was the explosion of computer technology offshoring (hardware) in the mid to late 80’s that led to the proliferation of the personal computer….the so called “clone wars.”

This same benefit gave us the rise of the American programmer for software to run on these PC’s. When Y2K rolled around, these same programmers started to “go rogue” and pursue a personal wealth-accumulation strategy by leaving the rank-and-file of employee status and going contract instead, demanding rates of up to $200/US per hour. The dot-com era fueled this further, until you had very small tech companies with labor burn rates of millions of dollars per month.

Now, the employers are responding EXACTLY the way the professional white-collar workers trained them to….by looking to cut costs. Offshoring is just a cost-cutting excercise, and I for one believe that it will benefit the average American consumer to the same level that offshoring blue-collar jobs has…it will result in cheaper products and services.

Get used to it, folks….we want cheaper stuff, we have to change (constantly). And for the poster who claimed that the American healthcare system needs reform before American labor can become competitive again, just wait. One of the single biggest savings I’ve had as an employer who has moved all my software development to offshore firms is that I’ve eliminated almost ALL of my healthcare costs from my bottom line. Enough other employers do that, and the healthcare system will implode on itself, having to look for ways to cut costs to remain competitive.

First cheap electronics, then cheaper automobiles, then cheaper software…..next comes cheaper drugs, doctors and healthcare.

maxx says:

Re: Re: Re: Outlaw Capitalism

mike, when enough americans are destitute, and unable to buy your companies products, you may lose your customer base,unless it is overseas, AND your company. The big picture is that this is an organized, program that is blatently anti-free competition, and is ordered from on high.(New world order). These guys have, since at least oct.2003, initiated a plan for a very distructive great depression,to reduce and ultimatly destroy the sovereignty of the USA.

maxx (user link) says:

Re: Re: Outlaw Capitalism

there is a differance between coporate cronyism and free competition, you should know this,evidently you haven’t lost your jop(or should I say position?) The elite corporate decisions to initiate a great depression (outsourcing) go against all forms of competition. I get and see the big picture. Do you, or ARE you one of these degenerate elite?

Mike says:

Re: Re: Re: Outlaw Capitalism

Elitist? Hardly….

I was “outsourced” in 1997 by a dot-com company that has long since failed. I realized that I was just another pig suckling on the teat of a big company (sound familiar) and took my severance check and my pension buy-out, and funded my own company. 7 years later, I employ 100 people and have built a company that does more than $7MM a year in software development services and product sales. I’m not a millionaire (yet), but I do have a nice income. I also have a very lucrative employee profit sharing pool where everyone of my 100 employs gets the equivalent of 25% bonus per annum, with the opportunity to become partial owners in the company.

All of this out of an initial $50K investment of my own money.

Yes, I “lost my job,” but rather than moaning about my lack of skills and competencies by blaming others, I did something about it and MADE 100 more jobs. Oh, and 30 of these jobs aren’t American jobs, but overseas jobs.

Get with the times, Maxx. Life’s too short to complain.

momo says:


Until the issues of the (lack of an) american education system and the costs of an employee in america (e.g healthcare, taxes etc) offshoring will continue.

I’m not even sure what’s happening can be considered offshoring, it’s a wholesale hiring of overseas workers in place of americans by American based multinationals. I think the term offshoring doesn’t really describe whats going on now.

momo says:

Re: fixes

And after reading the article the author ends with the following “until robust job growth returns, the debate over outsourcing will not go away”.

But that’s just the point that no one seems to be considering. Why is there a belief that robust job growth will return? Let’s take the example of R&D. Suppose I wish to hire someone with a phd in mathematics, computer science, economics or biology. Why should I hire an american? At the very least it makes sense from a cost standpoint to hire someone in india, china or eastern europe. The wages are *way* less, the employee costs are *way* less and if it doesn’t work laying off all those new hires doesn’t generate the ill will it would in the us. Consider also the current climate towards various types of stem cell research. Why limit myself by working under the laws of the us?

maxx says:

Re: Re: fixes

If enough skilled Americans are laid off, due to outsourcing, unless you are extreme high level mgt.,eventually you too will lose your job,or company. Now thats justice!
Ps. In some countries,social unrest, due to sudden unemployment,has resulted in the targeting and untimly deaths of top executives or owners, who,(unjustly or not,),the “natives” have thought were responsible. the lucky ones(Owners)scurry back to the security of the US.

Anonymous Coward says:

No Subject Given

220 million new jobs eh? For who… doing what?

I just simply can not comprehend where these numbers come from.. and where they are going to find the 220 NEW? people to fill these jobs.
So we have 300 million jobs.. now we have 220 million more.. where oh where are we going to find the 220 million people to fill them.. moreover how are we getting by currently without all these jobs being filled?

They should mean 220 million changed jobs.. like as in from tech to burger flipper.

The real problem with outsourcing is there is not ENOUGH of it, we are only outsourcing the middle class posistions.

Start outsourcing CEOs and other execs and then you’d really see the economy moving ;).

Joe Baderderm says:

Re: No Subject Given

RTFA, It’s 22 million new jobs by 2010, not 220 million. Your argument is pwn3d.

And what about the “insourced” jobs? I don’t want those darn foreign companies hiring american workers! Who’s with me?? Who’s going to get me my fries and coke if they hire americans?

Why does everyone who loses their job to outsourcing have to go work “flipping burger”? In the past few months, I have read so many articles about people that have lost their jobs that have gone on to start their own companies. Is everyone that inspired? No. But some people don’t sit around biatching all day long and actually do something about there situation. And don’t give me the crap about people losing their homes, if people were smarter about what they bought and had a budget and plan for something like this, they would have the six to nine months to come up with something else to do.

Mike (profile) says:

Re: No Subject Given

I’m amazed that everyone who posts comments like this seems to assume that we’re all so stupid that we’ll never be able to create new jobs. If you have so little faith in your country, why should we even have all the jobs? I, at least, believe we’re smart enough to create new jobs here – and many people are working towards that end. We don’t (as you seem to) expect to just sit back and be handed a job.

Bastard Sammy says:

Re: Re: No Subject Given

If this kind of outsourcing continues, it’s likely that the middle and lower classes in this country could concievably cease to exist. Then what do you do? Sure, you can go into business for yourself, but that depends on people buying your product or service. If no one is employed, then there is no one to buy anything. Except for the elite 00.1% of the population that doesn’t need to worry about work. Under the current economic setup we have in this country and others, there’s no way this can be sustained. I suppose, if you think about it, you should be asking, who really benefits from a trully global economy? There’s only one answer. The rich.

Joe Baderderm says:

Re: Re: Re: No Subject Given

In what kind of economy do the rich not benefit? And doesn’t the world benefit from a global economy?

“If no one is employed, then there is no one to buy anything.”

While I will admit that your statement is true, tell me how the situation would become so bad that no one has a job? On Mars right now there is no one employed, so no one to buy anything, but here in the U.S., maybe we could try selling things overseas as well?

I am not saying that losing your job doesn’t suck. It does. I just think that people aren’t looking at the overall picture, only their shallow vision of the situation. There are good arguments against offshoring but no one ever seems to come up with legitimate info to back it up.

Anonymous Coward says:

Greed comes back to bite.

Look at this another way if you will….

Those friends that lost their jobs probably (i am generalizing, but im sure you know someone who fits this generalization) spent 5 or 6 years in the 90’s and early 00’s jumping from one company to another, always asking for more money and in reality not really offering the company much at all (since they left for the next job before they really got anywhere).

They increased their wages to the point that the companies had to go elsewhere. You can’t have it all your way…

all the greed comes back to bite.

I like the article, I do give a little bit of acknowledgement that the outsourcing really helps the rich, but in the long run it also helps America.

Mike I wish you luck in convincing more people. I do

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