Slashdot Mirror
How India is Saving Capitalism
alphakappa writes "Salon goes onsite to Chennai (Madras) in India to investigate the whole offshoring phenemenon (free daypass) and comes up with an interesting series of stories. Katharine Mieszkowski starts with a company CollabNet which creates collaboration software for teams to work together on projects from locations all over the globe, and has centers in Brisbane (CA,US) and Chennai (India) - a company that would not exist if they didn't have access to engineers from India. She makes the case that in most cases, it is the necessity to survive, rather than greed that has fed the offshoring process. As Behlendorf from CollabNet puts it - 'We saved the jobs of the people who are employed in San Francisco by hiring people here [in India],' he says. 'I don't know that we would be around as a company if we hadn't done that. What was the right thing to do, morally?'"
The NY Times Tom Friedman has written many articles arguing a similar point.
- A Chennai resident
The wages paid to Indian workers are actually considered very good. The difference is in puchasing power parity dollars, and unadjusted rates. As more jobs are created in India, there is more competition for skilled workers and their wages increase. As the gap between US and Indian wages decreases, they will need to find other ways to compete than price. This is much like Japan did in the past 50 years: going from competition on price of good such as electronics and cars, to competing on innovation and quality. A good outcome for all concerned.
The only reason that the US dollar has any value overseas is that it can eventually be redeemed in the US. Someone has to eventually spend it here (although not necessarily the someone that you initially gave the dollars to). Otherwise it's just a piece of paper. The situation is the same with international banks - sure they convert currencies, but they do it in accordance with an exchange rate that is rooted in what a given currency will buy in its country of origin.
Outsourcing is nothing more than a natural market reaction to overpriced labor in certain areas of the economy. It is clearly in the interest of corporations to find the cheapest labor skilled enough to do a job. Outsourcing is a market-driven hint to some in the labor pool to expand their skills, find new opportunities, invent, completely change career paths, or otherwise find a way to make themselves valuable.
According to the Bureau of Economic Analysis, the US enjoys a trade surplus in services, to the tune of $60 billion. A large portion of that surplus is computer services. This bears repeating: we import more programming/analysis/consulting than we export. The the overall service balance is shrinking, from $64B in 2002 to $60B last year, but is still a large surplus. The shrinking is easy to explain: as more nations/laborpools develop the skills to do certain jobs, companies are given greater selection. Salaries in the computer services secotr in the US will trend downward, while they will be pulled up overseas. They will meet in the middle somewhere
Not all jobs will be outsourced. There will still be many jobs, especially in emerging markets, that cannot be outsourced because laborers overseas do not yet have the skills needed to do the jobs. This is a great opportunity for those left without a job to improve their skills and enter these 'safe' markets.
There is no sence in complaining about outsourcing. "Evil" corporations are going to do it whether you like it or not. Government protection is not the answer, mainly because it isn't the government's responsibility to ensure you have a job. That onus lies on you. If you are unemployed, stop reading Slashdot and find a way to be valuable to the economy. Self-reliance, innovation and hard work are what made this country what it is and will continue to keep it great.
As the US labor pool is forced to become more skilled, the standard of living in countries like India will rise, creating a larger market for US produced goods, thus creating more jobs is the US.
I repeat: THE ANSWER IS NOT GOVERNMENT HANDOUT, SUBSIDY OR PROTECTION!!!! IT'S AMERICAN INDUSTRY AND HARD WORK!!!