Actual Numbers On Who Benefits From Offshoring
from the maybe-it's-not-so-bad... dept
One of the more controversial topics around here over the last couple of months has been the issue of tech companies sending jobs overseas. During this debate, I've maintained two main points: (1) companies that are doing this without thinking are going to realize that there are unexpected costs to offshoring - and those who rushed into it will regret some of the decision to do so and (2) on the whole, though, offshoring in many situations is a good thing for the US economy, even if it sucks for those directly impacted. It's that second part that seems to be controversial, and many people seem to be in favor of protectionist policies that are only likely to cause more problems. If we force jobs to remain in the US, they'll still be created overseas, but run by non-American companies, making American companies less competitive. Now, McKinsey has done some research and provided some numbers suggesting how the US benefits from offshoring that answers many of the questions people have brought up. The end result shows, that the overall benefit for the US is definitely there, as each dollar of spending that goes overseas, will bring back at least a $1.12 into the US. They go through a pretty complete explanation of how they come up with this number which is worth reading, showing how profits come back to the US creating new jobs, more equipment spending comes back to the US to support jobs overseas and redeployed labor within the US economy, which often boosts the economy. They also point out with baby boomers reaching retirement age, it's looking like the US economy is going to need more workers in the very near future, not fewer. The article also addresses historical issues of workers who were displaced by previous offshoring trends, showing that the majority of them find new jobs at similar rates of pay in a fairly short period of time - and they expect the average time to be even shorter with service workers, where the people are more highly trained, and the skills more applicable to a wider array of jobs. Clearly, some people do get left behind, and it is not (at all) a fun process to go through. So, those who are impacted directly by offshoring have every reason not to be happy with the practice, but so far, all of the solutions they seem to come up with create a situation that makes things worse for the US, rather than better. Creating better incentives for companies to hire and train these displaced workers is the most sensible plan I've heard so far.