Why Outsource When Workers are Willing to Telecommute?

An anonymous reader asks: "Corporations and management resisted telecommuting for years, now jobs flow to distant nations. Did telecommuting become acceptable because of the greater distance? Because some form of on-site management persists? Because labor laws are favorable? Because a well paid middle class is a political threat? Is it really as simple as money? I'll work cheaper if I can choose where I live and work. Must I leave my country to do so?"

Comments

It's been tried before

[vishakh]

Companies did embrace telecommuting before. It did go through a phase when it was hot, but things eventually cooled down. I remember reading about this on my "Social Analysis of Computerization" class. The reasons given were that:

- Teleworkers are harder to monitor.

- Apparently, telecommuting hit productivity hard.

- Workers aren't in office enough to get promotions.

- In the office, there aren't enough people to keep ideas going.

- Working at home can be distracting.

- Telecommuting breeds resentment among co-workers since they are anonymous to each other and also because non-telecommuters might dislike others getting such a "rosy" deal.

Ultimately, however, it came down to managers being distrustful of new ideas. They dislike having to put such a high level of trust on employees that they rarely see. They like things the way they are right now and wouldn't really like to see them change. Maybe after some time passes, when many current prospective telecommuters rise to managerial positions, we might see telecommuting establish a strong presence.

Why Silicon Valley Costs Too Much

[Nova Express]

One troublesome fact unvoiced in these discussions over why some companies might outsource jobs is the fact that the government of California has made it prohibatively expensive to employ people there, with the result that businesses are leaving in droves.

Take a look at this article in Fortune . With it's high taxes it's long been more extensive to do business in California than elsewhere, but Governor Gray Davis and the Democratic-controlled legislature have enacted so many costly new taxes and regulations that businesses have finally had enough.

A few tidbits from the article:

• "The state has lost 289,000 manufacturing jobs since 2001."
  
  
• Davis and the legislature have approved new legislation that will increase some businesses' costs per worker "by $4,000 to $5,000 a year."
  
  
• "The legislature made workers' compensation more expensive by mandating a large increase in benefits. California businesses now contribute the highest premiums by far per $100 of employee wages: $5.85, vs. a national average of about $2.50. Yet instead of cutting costs, as other states have done, the legislature recently raised maximum benefits by 71%, from $490 per week in 2002 to $840 in 2005. Countrywide and Verizon both pay four to five times more in workers' comp per employee in California than in Texas."

I have a programmer friend in California that was bemoaning this very negative business atmosphere last week in reference to this article. "In 2001, Abrahamson said, South Coast Building Services paid $500,000 to insure its workers for on-the-job injuries. A year later, the company's bill more than tripled to $1.7 million. This year, the tab nearly tripled again to $4.8 million, enough to erode the firm's profits on its $33 million in revenue."

Quoth my friend "I knew it was bad, but I had NO idea it was THAT bad. 1000 employees, and $4.8 million in workmans comp. Holy fuckin' cow! No *wonder* it's so damned hard to find a job!"

During the Internet boom, the Davis administration spent money like drunken sailors rather than laying the groundwork for sustainable growth. Now it looks like they may finally have suceeded in killing the golden goose.

Silicon Valley on the cheap. I did it, so can you.

[LibertineR]

I make close to $200K. I parked the Navigator and Viper and started taking Caltrain. I save $200 a month on gasoline, and I get work done on the train instead of sitting on hwys 17-85-101 on my way to work. Instead of the $10 I spent on two lattes per day, I now brew my own coffee in the morning and carry a thermos. Thats another $250 per month. Movies every weekend? Fuck that; NETFLIX rocks, and I can make a dozen hotdogs for what one costs at the Mountain view cinema. $50 per month.

Going to Nola's or Baha Fresh everyday for lunch? Not anymore dude. thats $300+ a month reduced to $100 by bringing my lunch from home. Now that I ride the train, I dont stop at Fry's twice a week to "just look around" like I used to tell my wife. An easy $150 a month saved just by staying out of the book/CD/game aisles. If I need something now, Ebay has it. Drinks after work with my team? Once a week instead of 3-4 times. Thats another $100 saved.

In one year, I have saved enough to help me make down payments on two rental houses, with positive cash flow coming in, that goes straight to the bank until I have enough to buy another one.

If you can give up some of the ego stuff, you can live just fine in the Valley. Now, when I go out in my Viper on the weekends, I dont give a shit about how much the gas costs. I havent filled up in 3 weeks.