A Different Take On Outsourcing
from the not-quite-true dept
OldYeller writes “While I’m a big free-market proponent (even though my employer’s in-process merger may cost me my job), a recent commentary piece in Business Week gave me pause for thought on offshoring. In a nutshell, the author argues that free markets serve everyone because whatever is being lost (manufacturing jobs) is replaced by something as good or better (service/technology jobs). However, after nearly 200 years of fitting reality this doctrine, called Comparative Advantage, seems to suddenly be less valid. The catch is that with today’s connecting/integrating technologies, the barriers to remotely sourcing almost any tradeable good or service have fallen to the point that we’re now just experiencing labor arbitrage instead of markets seeking balance. The historic friction in adapting to change globally is what allowed ‘first-mover’ advantages to outweigh the losses of mature/commodity offerings. Now, as fast as you can invent a high-value service, it will be sourced to the lowest-cost provider, and the window of opportunity for high-cost countries like the US to build employment around innovative change shrinks. This is great from a global efficiency perspective, but it implies that the best survival strategy for many American job seekers is to focus on personal-contact professions that can’t be done remotely (ie health care), but there will only be so many of those to go around.” Absolutely a worthwhile article, but there are a few problems with it: it makes the very wrong assumption that “labor” when it comes to knowledge jobs, is a commodity input and cheaper is always better. As many companies that are bringing their work back to the US are discovering, this just isn’t true. There are many jobs that really do require specific knowledge and experience from specific people. Plus, more jobs than you would think actually do require local knowledge and accessibility. Finally, the article (as all of the anti-offshoring articles do) ignores the simple fact that every time large market shifts like this occur, it creates new opportunities. Wherever there’s a problem, there’s an opportunity to solve it. Some people are complaining that offshoring is putting people out of work. All that says to me is that there are a lot of available, experienced, smart people out there. That’s an untapped resource. That’s an opportunity.