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An Independent Study on Offshoring IT?
vsprintf writes "What are the real effects of offshoring on the U.S. technology sector? Pick your economist on the subject. The Bush administration's Gregory Mankiw says it's all good, and exporting jobs is just a new way to do trade. In Congressional testimony, Ralph Gomory says a little bit is okay, but too much is bad, while Herman Daly says it's just plain bad. The ITAA's paid mouthpiece, Harris Miller, says it must be good because IT workers in India wear Nike tennis shoes. At last, it appears the IEEE-USA has persuaded Congress to pay for an independent study to determine how offshoring really affects U.S. IT."
The only people who will benefit from outsourcing are corporate execs and stockholders.
The rest of us will be left with nothing to do and it won't matter if goods and services are cheaper if you don't have a wage to pay for them.
Meanwhile the Indians etc. will be undercut by the Chinese and they'll be undercut by someone else.
Where does it end?
Well, first you persuade other countries to open up their economies to your imports, claiming this will enable them to step up on the ladder towards geater societal wealth and towards a more skill-based economy.
Then, when they actually do, and start reaping some rewards from it, you start acting like it's the second coming of antichrist.
So what do you suggest? Stop outsourcing, stop manufacturing abroad? Are you also then prepared to accept the trade retaliations from the rest of the world? Some people applauded your steel tariffs as something good. Of course, the US ended up losing a lot more money - and more jobs - total than it saved in that particular sector by postponing an inevitable restructuring.
Trust the Computer. The Computer is your friend.
You're forgetting the basketball players and other sports-models paid millions to promote them. Thus there will be a cashflow into the US gold jewellery, steroids, cocaine, and call-girl industries.
I just think there is an ever-growing paranoia in the developed countries about software job offshoring. Hasn't such offshoring of other jobs happened in the past, like say, manufacturing? Aren't most cars and other white goods manufactured in Japan and China? What happened to the workers in that industry some of who would obviously have lost jobs?
More to the issue, I'm not sure what decides the level of outsourcing - "some", "moderate" or "massive". Even when offshoring wasn't happening, a lot of companies prefered "outsourcing" - subcontracting their IT needs and business to specialist companies who had the skills and knowledge to fulfill them, leaving the parent organization free from the usual worries of delivery, quality, acceptance etc. So if the same happens now, it's bad? Because there is growing fear of losing jobs? Surely, the involved professionals would be smart enough to know that economics drives a business, not preferences!
Further, if the products of US-based companies are used/consumed by people elsewhere, from the (less) money earned from US companies, surely the profits are going back to USA. So the article gave an example of Nike. I'm sure more parallels can be drawn without stretching the imagination too far!
Finally, if the cost of building a product, be it software, is relatively less (and so is the cost of maintaining it), then the cost of direct users/consumers would be much lesser. Say, if the Air-traffic control systems cost less to build and operate, it would lead to less fees towards airlines, which means they can cut costs further and offer cheaper tickets.
And contrary to what another poster mentioned, yes, the corporates may follow the skills, but why would they distance themselves from consumers? They have nothing to gain there, if there is a growing resentment against their products/services. And if they decide to not pursue offshoring, they stand to lose considerable market share simply due to the cost-benefits offered by the competitors. So, from their perspective, its a downward spiral.
Outsourcing is happening. Live with it. Some jobs are going elsewhere. Sure. Are those the best jobs? Surely, it gives the professionals in the developed world better jobs (creative as compared to monotonous, boring, trivial).
Maybe this brouhaha is there because IT professionals have a bigger mouthpiece, and a cheaper and far easier means of voicing their concerns.
http://efil.blogspot.com/
As it is today, people in poor countries see their young children starve to death, or die from lack of medicine, just so people in rich countries don't have to suffer the discomfort of looking for a new job. Outsourcing is part of a re-shuffling of wealth that may be uncomfortable for a while, but in the long run economies around the world will become more similar, so we won't see the extreme cruelties and conflicts of desperation that we see today.
Terrorists can't threaten a country's freedom and democracy. Only lawmakers and voters can do that.
It's called taxes. If you make a six-figure income, in most states the government will take 40-50% of it. If you work hard at avoiding taxes (residing in a favorable state, using loopholes, etc.) you can generally get it down to around 25%, but it's still nothing to be sneezed at.
For a low range in the six figures this is true, but as you progress towards the richer and then the wealthy, the actual percentage of assets paid in taxes drops dramatically. And let's face it, the people making money from off-shoring aren't in the low range of 6 figures. This is because most of the money the federal government gets from the rich and the wealthy comes from capital gains tax (the sale of shares) or dividends tax. The bush tax cuts have dramatically reduced these. Also, you have to actually sell your shares or get dividends for this to kick in. If, like Bill Gates, you keep your fortune in paper, then you are not taxed at all.
Also, lately there has been a wave of corporate off-shoring (also known as inversion), where you reincorporate in a tax shelter (like the tax-free bermuda), so that you pay dramatically less taxes. It's part of the reason why 60 percent of US corporations didn't pay any taxes between 1996 and 2000 (microsoft being one of those 60 percent).
But it is dumb to say that the average Joe in the US gets no benefit if some rich honcho makes a few billion bucks from some folks in India.
Objectively true, some of that money does flow back to regular people. But more is lost by off-shoring than comes back in corporate profits, since only a percentage of the profits gets spent or reinvested inside the US.