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Outsourcing is Good for You
gManZboy writes "Catherine Mann, from the Institute for International Economics, has a look at What Global Outsourcing Means for U.S. IT Workers up over at Queue. She's got an interesting argument: outsourcing means cheaper IT products, meaning businesses will buy more, meaning more products to make & manage = net gain of IT jobs in the US. Ummm, did you follow that?"
I've been hearing more and more often about something similar. While not the same idea, it's the idea that America "recycles" (to be put in an Economists terms) jobs every year, something in the order of 50 million or so if I'm not mistaken, and that outsourcing somehow is just a natural process of this recycling...
:-P
If you ask me, I think Economists have it tougher than Computer Scientists, but that's just my opinion.
-Devin Torres
Real programmers can write assembly code in any language. -- Larry Wall
Last time I checked the market set the price (with obvious unnamed monopoly exceptions *coughMicrosoftcough*). The price the company pays for the production of the item has negligable impact on price--and that's fine. The price people are willing to pay for something has a much bigger impact on the price. All outsourcing overseas does is fatten the profit margin for the sales of these IT projects. So right there, her basic premise is crap.
I mean, is she REALLY saying that companies will have more money to pay you with, because they don't have to pay you? WTF.
-- "A chicken is an egg's way of making another egg."
Meet my good friend, reality.
Hate me!
I am a programmer, I make my money from making programs. I expect to get paid very well for what I do. I have spent thousands of dollars in not only college expenses, but also other training and materials. If x number of programming jobs are exported to another country because U.S. coorporations don't want to pay what I expect how does that benifit me the programmer? The economy as a whole 'may' not be hurt, but actually helped, but in the end there are less programming jobs out there than if there weren't outsourcing programming jobs. The big picture doesn't make me feel better.
Nuttles
Saved By Grace
Scary, but it works.
It's basic economics. What is described is how it works in theory. However, the theory requires perfect knowledge for all parties involved, zero costs for movement of capital (human and otherwise). I'm also unsure how comparative advantage (Google and David Ricardo are your friends) works in a market that is essentially saturated.
Perhaps the thing that really needs to be looked at is that IT support is viewed as a commodity. Support offered in India or Russia is viewed as the same quality product as that offered in the US. If this is the case, quitcherbitchin. I doubt you are buy American in other walks of life. If there is a difference in quality, it's time to express that. Was it Dell who found that their business customers wanted US tech support instead of Indian tech support? (or HP?) The product wasn't a commodity, so it couldn't be switched.
Rather than gripe about losing your job, explain why it's better that you have it than someone in another hemisphere.
And if you made it this far, here's a link to a non unreadable article. Will Taco et al. ever admit they are wrong with this color choice?
Jesus was all right but his disciples were thick and ordinary. -John Lennon
I don't see stocks doing so well these last few years. Looks to me like the savings are more likely going into the executives' pockets.
Net Result [Appendix A]: Those employees are now doing essentially the same job for substantially reduced income and benefits.
is that economics is a zero-sum game. Lower costs supposedly means more profit to executives, but no increase in jobs. Higher overall demand supposedly means higher demand for outsourced workers.
... or you'll be paid to integrate that piece with other pieces that can be picked up cheap as open source software or as cheaply developed components.
What the author is trying to point out is that whole new markets of opportunity will open once the cost of basic programming activities is low enough. One of the benefits of open source software is that poorer countries can now obtain technology that before was out of their reach (or they can at least extract higher discounts from proprietary vendors).
I have a friend who works as a software consultant customizing proprietary accounting software for small/medium enterprises like those described by the author. That's the basic outline of the future -- smaller companies could benefit from technology that goes beyond office applications, but to more backroom ops, or e-commerce opportunities, or whatever. You won't get paid based on your ability to write something that can be written cheaply overseas to target a generic problem -- you'll be paid to tweak that piece into something that gives a competitive advantage to your customer
Many industries assemble cheaper components into an overall design that delivers a value greater than the cost of the parts. Software, as an intangible good, provides some interesting (perhaps worrying?) differences that make economic analogies a little tricker to apply.
But I think while some components are open to a research/science approach (algorithms, maybe frameworks) I think the majority of software is close to manufactured goods in that customer requirements drive a solution that isn't generically applicable or saleable (a problem for Microsoft-ish companies that try to sell the same thing to everybody). The world of de facto standard products gets a lot of press because it's typically winner-take-all (google, MS Office, MS IE), but the growth in demand and in jobs will be in the world of tweaked software.
See:
u ll.html
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"Exporting America : Why Corporate Greed Is Shipping American Jobs Overseas"
by Lou Dobbs
"The power of big business over our national life has never been greater. Never have there been fewer business leaders willing to commit to the national interest over the selfish interest, to the good of the company over that of the company's they head."
See also:
http://www.pbs.org/now/transcript/transcript334_f
DOBBS: I want to hear one of these candidates sharply and clearly say this country is about the people who live in it.
DOBBS: You have a responsibility not only to your investors, you have a responsibility to the marketplace, you have a responsibility to your customers, to the community in which you work. You have a responsibility to the country that makes your business possible in the first place.
MOYERS: Heresy. Are you a traitor to your class? The investor class.
DOBBS: Well, I'm, you know, I think most of us are investors. And I hardly think I'm a traitor. I think it's traitorous and treasonous and absolutely ignorant for these people to be out ballyhooing double-digit returns on equities when first we have to get our house in order in this country. And bring back integrity, principle, leadership to our business enterprises, to our markets. And try to do a lot better for the people who count. That is the middle class.
MOYERS: You begin with a stunning quote. I'll read it. Quote, "The 20th century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power and the growth of corporate propaganda as a means of protecting corporate power against democracy."
DOBBS: Absolutely. Corporate America has at this time controls the national media. It controls nearly every avenue of an American citizen's access to information about the way he or she lives, about those forces that are influencing our lives.
And corporate America is protected in Washington by the dollars it spends. It is protected in the media by some virtue of ownership.
Because we're all shareholders, remember? Except the 50% of the population that isn't, like those of us still trying to pay off the student loans we took to get us into white collar jobs and out of the dying manufacturing industry. We're the real suckers. Thousands invested in a future that was pulled out from underneath our feet.
Well I for one very much appreciate tax breaks for the poor. When are we going to get a candidate who runs on the platform of eliminating completely all income taxes on anyone who makes less than $40,000 year, while somewhat raising taxes on anyone who makes between 40K and 100K and signifantly raising taxes on anyone who dares to make more than 100K/year.
Also, lets repeal that stupid gas tax. That's about as regressive as they come and our highways and byways are just fine the way they are.
Quite an experience to live in fear, isn't it? That's what it is to be a slave.
Take the tarriff on the steel indstry. It saves a dying industry, so that the workers do not need to try and find other jobs. But it makes cars more expensive, and hence makes domestic made automobiles less competitive, as well as forcing consumers to throw away extra money giving it to an industry which isn't able to produce enough value to cover it's cost.
People need to learn that having to change and adapt in order to survive is a fact of life.
Feel free to mod me "-1 - Angry Jerk".