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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?"
On top of that, you can outsource your own job, take up another one, and outsource it too. Basically you can be making way more than you currently are. I think there was a /. story on this a while back.
No I think it means more outsourced. IT jobs in Asia and India. And larger bonuses for american executives.
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
Thanks to outsourcing, everything I buy at WalMart with my unemployment check is cheaper!
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- The
.com bubble bursts, causing employees working for firms whose primary business is selling IT products to lose their jobs.
- Bigger IT companies that didn't actually fold outsource some work to reduce expenses.
- Due to public demand and reduced expenses, non-IT companies buy more computer crap.
- Non-IT companies have to hire the old IT employees to run the new computers.
Net result: Those employees eventually have jobs in computers, just not with computer companies.This actually makes sense, and I've seen it here locally. A lot of people I know who were laid off from startups are now working for their old customers. The problem is, this trend can take years. The number of businesses that totally went under put a ton of IT talent out of work. Compensating for that will take some time. That's not good news for the employees who haven't landed a job yet.
One slight problem with that theory- we don't make anything in the United States anymore, we're a POST-industrialized nation. So while this will help China, what new skilled labor positions are we going to get here? Especially since any Indian can supposedly do any skilled labor position just as well as any American and for 10% cheaper under the H-1b regulations?
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I outsouced my /. reading to India, i pay 4 dollars a day. They even make quality posts about random topics on it.
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Hate me!
Sounds like you discovered the secret of multi-level marketing. Sssh.. before someone patents your idea.
"dope will get you through times of no money better than money will get you through times of no dope"
No, her basic premise is sound economics. What outsourcing really does is grow the economies of those other countries. The money going into those economies results in higher economic spending power among the outsourcees. They in turn buy more goods, which employs more people in their local economy. This causes economic growth... at the same time it provides the ability for people in these countries to start their own business, utilizing cheaper local professionals, to produce products and outcompete the American companies. That sounds scary... but the net gain is cheaper goods and services for US as well. This in turn enables all of us to have more spending power and allows OUR economy to grow as well. This creates more jobs.. etc.. etc..
It's the concept of competitive advantage. The workers in India have a competitive advantage as they can do the IT jobs cheaper, and ostensibly at or near the same quality level. By allowing them to take that advantage they win (their economy grows), but they also begin producing products that out-compete the more expensive American products. This is the exact same cycle we saw with Japanese cars (which has come full circle with those companies opening up manufacturing plants in the United States).
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I'm sorry, in the short term it might not benefit you as the programmer. But you were the one that chose to do programming and because of your choice, you have to face the fact that thousands of people overseas whose families earn 1/10th of your income also need to eat. They'll be asking the question how come they can do similar work as you and me and are willing to be paid 1/5 to 1/10th of what people in the US earn, but they shouldn't get the jobs?
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
This has to be the first ever economic theory equivalent of the Chewbacca Defense.
See:
u ll.html
...
...
"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.
Bitch and moan as we may, this ridiculous imbalance in world wealth doesn't look very stable to me. Outsourcing this kind of stuff had to happen.
There are masses of very poor people out there now able to afford a computer and internet access. Their disadvantages are many, their only advantage is that they're poor. So of course they will work for less. Suck-it-up dept is right.
I don't support the exploitation of workers in poor countries, but it's hardly exploitation if these people are making a living doing what they do.
If other reasons we do lack, we swear no one will die when we attack
But consider when industrialization became big in the 19th century (at least where I live). It was hell on the little people then. Mass unemployment and lots of suffering.
It was a good thing in the long run, though. The world is much better for it:
Infancy/child death rates where around 20-30% before industrialization. The rest of our quality of living has been raised similarly; to be able to study is half of life's meaning to me. Lots of people had brain damage because of bad harvests when they were children. Etc, etc.
This outsorcing trend will (almost) certainly be a Good Thing for the third world and all humanity in a few decades.
It just sucks to be us -- that has to live through the changes in the wrong place. Like the unemployed and workers of the early industrialization.
I find this whoring by spokespeople to claim otherwise disgusting.
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"Since programmers don't need to be physically close, why not hire the cheapest capable person? If you only pay $10/hr, you make $40/their hour, of course minus your management work."
Works fine until people wonder why they're paying the middleman $50 at all when they can turn around and hire the $10/hour worker directly. And that is exactly the situation here.
IT staff aren't getting magically "promoted" into "higher value added positions" when their jobs are outsourced. Their actual job is leaving the country, and they're being laid off. Whether that's better or worse is a relative viewpoint. Regardless, there aren't any equal-paying (much less better-paying) jobs replacing them.
" What about this doesn't make sense, when I was 14, I worked for a guy cutting lawns doing almost exactly this."
Yeah that's great, except you can't offshore outsource lawn mowing. Going offshore you can exploit a completely different tier of societies that aren't tied to the ecomonic regulations and expenses of the corporation's home country. You can't live on $3/day here in the States.
Completely different situations.
I have no sympathy for people who want government to distort economics.
Well, considering that economics is poorly-understood to start with, I find it hard to imagine how governments can distort economics worse than corporations distort economics.
The "free market" concept which is so prevalent among libertarians and corporatists is based upon an ideal model, in which everyone in the model is a free agent. Unfortunately, that's not a true model.
In the corporate model, a select few in charge get to make up the wages paid. Now, this is somewhat constrained by the market availability, but as we discovered with outsourcing, there is no lack of people willing to work at pretty much anything, for almost nothing (comparatively speaking). Meanwhile, those who fix the game (upper management) ensure their own positions are not outsourced, while paying very little to everyone else.
Meanwhile, those with the money are able to influence government policy to a much greater degree than those without much money. This also shifts the balance of power just a little more to those running corporations. Whether the DMCA, the INDUCE act, or the consolidation of giant media, the individual loses out, while the corporations gain.
Economics in the US is warped. There is no such thing as a free market. Nor is there any indication that the free market is a good model to start with, let alone the best model. The only thing we've discovered so far is that empirically is better than fuedalism, socialism, monocracies (including monarchies, dictatorships, etc), hegemonies, and bozocracies (in which clowns run the show, like in the US).
Microsoft is to software what Budweiser is to beer.
Stop calling assembly manufacturing please, some of the biggest FUD out there now. Use the correct terms. Picky point but it's true. We used to manufacture cars, now we do not, we put together car kits.
And how is it "all of us" when it's not "all of us" who can get these cheaper goods and services? Aren't you leaving out the ones displaced, out of work, rehired at less wages, etc? That means it's not "all" of us, correct? Seems like you are assuming two things at the same time, that outsourced jobs result in zero loss of jobs here, and that they make more jobs at the same time. Say whut? How are people who have now much less money or no money supposed to take advantage of just cheaper trinkets, when basic bills and utilities aren't even being met?
Sorry, it ain't working, been hearing this scam pushed for over 20 years now. Stuff in general costs more, and good well paying jobs are much harder to come by, you can't just pick and choose a few selected entries like CPU chips or something and call it the total economy. Got the personal memory, don't need an article to tell me that. Stuff costs more now, not less, generally speaking.Yes, there are new products on the market, but in general, nope, stuff costs more. Food, energy, housing,clothing, all costs more. People have lost purchaising power, not gained. Bankruptcies are at record levels-why if these games are making the economy so good? Why is that? Really, why? Savings at all time historic lows-why is that? if we are all so better off, wouldn't it be trivially easy to sock away more now? But it's not happening. House notes are now common at 30 years, I can remember when 10 was common. Why are they at 30 now, is it because houses cost more, or less? and yes, I even mean the same excact size houses in the same areas. And interest only loans? Excuse me? WTF is that noise? People are getting so desparate to hang onto their houses-just a place to live- they basically agree to rent them forever? That's simply...weird, but I'm seeing the ads now on Tv and such, never used to be that way. Car notes are at 60 months now, I remember 12 month loans, and any random middle of the road joe normal blue collar paycheck could pay them off to boot, let alone a white collar at 2x the average wage. And some people are being forced to a perpetual lease, they can never really own a car (that runs and ain't beat to snot) now, it's turned into an expected monthly utility bill because the lease is all that's affordable. I remember when leasing was extremely uncommon for joe sixpack, now they push those magic cheaper numbers because outright purchase is so hig-where's the cheaper cars at? I remember a ton of cars brand new at under 2 grand when I first started driving, where are they now?
Less people have jobs with full benefits now. More people have lost their primary jobs and have been forced to take lesser paying jobs with less or zero benefits, sometimes not even getting a full work week. They just screwed people over on overtime this week with that new law to boot. More households require two checks to function, when one used to cut it easily.
How is this "better"?
Nope, the US did well when we pushed a full, completely diverse, vertically integrated and protected economy, the whole magilla, manufacturing, agriculture, energy production, etc, all of the above. It went downhill when they pushed swapping the cow-working- for the magic beans of get rich quick "investing" in whoknowswhereistan and making millionaires into billionaires. The only servicing I am seeing is the US middle class getting "serviced" right up the tuchus by the same old slick snakeoil guys.
The better era with a better styled economy would have been the 50's to late 60's. Since then, coincidentaly with allowing dumping of autos and the start of offshoring,and allowing huge tariff imbalances, and also giving TAX BREAKS to offshore, we've gone steadily down hill. Just because we have some shinier stuff now doesn't mean we have a bette
Do you know what is even more amazing? That people who have no knowledge on the matter think they can do a better job than virtually every economist who has studied the issue.
Mathematics is made of 50 percent formulas, 50 percent proofs, and 50 percent imagination.
Right, because we shouldn't be charging the people that use the roads to maintain them. Believe it or not, roads tend to degrade over time, as well as require more use. Our highways and byways are not fine the way they are. In Missouri, among other places, traffic is increasing so that in some places having a two or four lane road is insufficient. Also no matter where you are, you'll get potholes and cracks that need to be fixed. I just don't see how it's regressive to tax gas. It's just like the electric company charging more than the electricity actually costs so that they can maintain the power lines and generators.