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Outsourcing As A Source Of U.S. Jobs
An anonymous reader writes "The Economic Times, India's leading financial newspaper, reports that Diana Farrell, Director, McKinsey Global Institute during her speech at Nasscom 2004 said that Bureau of Labour Statistics is predicting a job gain of 22m in the US by 2010, against a job loss of 2m, due to offshoring. You can read the full article here."
An Indian journal reporting that Indian outsourcing is good!
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"People don't understand what a great opportunity offshoring is for US companies. Apart from huge savings, it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs."
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You see, that doesn't quite work when it's the high-paying jobs going overseas. The only jobs that can't are those that require physical presence, and I can only see so many ways to creatively remove a clog from a toilet.
Microsoft delenda est!
we lose 2 million engineering jobs, and gain 22 million pizza delivery jobs. Sounds like a great trade-off to me!
Seriously, we can't sacrifice professional jobs for low-level service jobs, even if there are more of them. If we do that, we'll have a rich and poor caste system. Wait a minute...
"She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring."
:-/
When have 5+ year estimates ever been accurate in economic matters?
Secondly -
Tomorrow's Jobs (from bls.gov)
http://www.bls.gov/oco/oco2003.htm
"Services. This is the largest and fastest growing major industry group and is expected to add 13.7 million new jobs by 2010, accounting for 3 out of every 5 new jobs created in the U.S. economy. Over two-thirds of this projected job growth is concentrated in three sectors of services industries-business, health, and social services."
Social services? Wheeee.... big money here I come.....
There have always beens some jobs that cannot be outsourced. Even if a telecoms help desk is all foreign they can't outsource service crew off shore. It make sense that with a slow recovery of the US economy (no thanks to bush) that there will be more jobs.
Jobs like DB admin need to be close to the DB and to where the info is coming from to properly administer it. System Analysts and Network analysts must be on site to do their job. Service technicians can't do it from over seas. Web developers can be outsorced but it's almost artistic and cutural gulfs make workign with foreign firms difficult. (Our Firm tried, the indian firm kept trying to use Lime green in their color schemes, no matter hwo often we told them we don't like lime green that).
The outsourcing only spells the end to abundant positions as low level code monkeys. We'll just have to move on and try to adapt like workers did durign the 80's when many manufacturign firms went over seas. There are still a large amount of blue colalr workers despite this, and We'll still have jobs even though an indian firm might be competign with us.
PS: I don't like bush but I'm not a democrat, in fact I'm Canadian. We have more than a vested interest in your prosperity, because it spills oevr here. It does seem liek he's responsible for you current economic slump, by spending so much on defence and offering Tax cuts that the budget won't support. Think more debt. Real soon.
"There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy."
Just for the record, the department of labor was predicting a job gain of 17 million for 2003. In reality there was a loss of tens of thousands of jobs. The 22 million prediction sounds like re-election propaganda...
Also, to satisfy the cynic in me, remember that these are merely predictions, which are possibly skewed to make the current market look like it'll be stronger, which will in turn (hopefully) make investors and consumers more confident, (hopefully) making the economy stronger.
Lastly, could this also be like George Bush's predictions that there would be approx. 1.7 million new jobs last year, as opposed to the 53,000 jobs lost last year (as reported by CBS news tonight).
The US product is about $10.5T:year, with about 100M workers earning about $40K:year. The $4T income are less than 40% of the revenue, with the other 60% representing corporate profit and taxes. Since corporations pay so little proportionately in taxes, and capital gains less still, the extra value is taken in corporate profits funneled to the very rich. Some estimates indicate that 15K US households (probably about 75K people, or .001%) own 5% of the Earth's property. The lack of job growth in the US, despite the looting of the Treasury for subsidies to these rich people, once again destroys the argument of "supply side" economics. After the debacle of Reagan's supply side, the last time these unemployment numbers were close to this high (excepting Bush Sr's next-closest nadir), you'd think this nonsense would be rejected. But I guess greed blinds even the survival instinct, when so much loot is flying through the air, without any merit to where it lands.
--
make install -not war
All of this antiglobalization and anti-free trade banter drives me up the wall. The trend of outsourcing and globalizing IT jobs is about the best possible example of free trade I have ever seen, because the jobs being exported actually do have labor standards and do dignify the population; and it is very good for America.
Take some hypothetical math here. Say there are 100,000 U.S. Programmers making about 80,000 dollars a year (with benefits and business side social security tax). That's
80,000 * 100,000 = 8,000,000,000 dollars a year.
Now imagine, aggregated, U.S companies via outsourcing eliminate those jobs (so-called creative destruction) and instead pay 100,000 indian folks an average of 20,000 a year.
100,000 * 20,000 = 2,000,000,000 dollars a year.
So, for 2 billion dollars Indian programmers are delivering the exact same amount of business value as the 8 billion dollar American programmers.
The end result? Well, at first, 100,000 less American jobs, and 6 billion more dollars for our "evil" corporate masters.
Yes some of that money will go to the clever executive who thought of the idea. Yes some of that money will go (gasp!) investors, who probably include many of the readers here.
And where will the rest of that money go?: to investment; to research; to newer jobs, etc. This is the inexorable march of progress here people. Can I predict what those new jobs will be? Of course not. Otherwise I would have already thought of it. But someone will drive innovation. This is all about a more effecient allocation of resources.
Undeniably, it sucks for those 100,000 programmers. There are a lot of hidden costs to creative destruction, soceital costs that do not show up in GDP numbers (family and emotional distress, for one). But those people, like lots of other people have, will have to reinvent themselves, to discover new talents, to retrain. In the end, it will be good for the country, and the world, as a whole. I mean, I'm sure it sucked for typewriter makers when computers gained popularity, or for horse farmers when the car was first mass produced, but for the whole soceity the creative destruction of those jobs was a good thing.
In any case, this is the best possible outcome from the development of a large educated populace in India. We are utilizing their resources, rather than competing against them. A worse scenario, from the American perspective, are the Indians out-innovating us and driving entire American businesses out of business in the global marketplace.
Schrock.
And then you have the nerve to repeat this supply-side bullshit--look how much the stock market soared when Clinton raised taxes on capital gains! The taxes on capital gains have to be incredibly huge before they start to matter--people will invest if an investment makes money, they won't invest if it doesn't make money--taxes on the profit made will have little effect on this.
On the other hand, taxes on labor have a very direct and simple effect on jobs. Corporations have to pay more wage taxes for every additional employee they hire IF they choose to hire that worker in the United States. Wage taxes and the lack of a nationalized health care systems (an exponentially increasing cost our employers are also expected to pay for, unless workers do without) are incentives for factories to move to either completely undervalued countries (India) or more progressive countries like Canada, which currently has a fantastically booming economy.
Bottom line: there has been no economy in the history of the world that has been able to withstand long-term trade deficits. It's great to save money on Indian labor, but unless we can find something else for American workers to do, unless we can find something else to export, then it doesn't do either the world or America any long term good. If you save 58 cents by outsourcing to India, hey, great, that's 58 cents more for the American economy. If you just spend the whole dollar on American labor, that's a whole dollar spent in the American economy.
Food, clothing, and appliances are a small part of poor and middle class people's expenses, and outsourcing and mechanization is primarily reducing the cost of these goods.
The biggest expenses tend to be housing, medical, and auto. For the heavily in debt, you can add in credit cards. Housing and medical are skyrocketing while auto is rising more modestly. Funny enough, to take advantage of low prices in large stores like Walmart, you need a motorcar, which will, in all likelyhood, cost you more than all of your spending at said stores.
If you really want to help the working class, break up the pharmaceutical and medical cartels and push for subdividing our oversized houses and building affordable housing to get rents and property prices under control. Reducing auto expenses would require a massive overhaul of our cities and infrastructure, but the benefits would be massive.
Walmart could push the cost of food, clothing, and appliances to $0 and in several years rising health, housing, and auto costs will eat that all up.
This is true. By sending out jobs overseas, we actually gain jobs. We are giving jobs away to ourselves!!! By the same token, When we give breaks to large corporations and rich people, it is the average people who benefit!
Also, by killing people in Iraq, we are actually improving their lives.