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Study Claims Offshoring Doesn't Cost US Jobs
SwashbucklingCowboy writes "Infoworld has an article up about a survey by the Software & Information Industry Association claiming that offshoring doesn't cost American jobs. The article quotes the executive director of the SIIA as saying, '[Offshoring] was used almost entirely as a form of expansion, not as a replacement.' Well, if a job is created elsewhere that could have been created in the US, isn't that a job lost?"
I worked for a major retailer for 17 years, then Feb 18 2005 wammo! My job was replaced by offshoring. The person now at my desk is a figurehead (or project manager) for a programming group in Bangalore.
Thanks,
Jim
Anybody to whom patriotism means more than profit. I realize that patriotism may be an entirely foreign concept to free traitors, but that's the difference between somebody who takes a college graduate and trains them to do the job and somebody who just offshores the job.
SJW: a person who perceives an injustice, and while correcting it, commits a greater injustice.
Not necessarily. It's entirely conceivable that a firm cannot profitably expand operations and pay the wage required to hire a U.S. worker. However, the firm might be able to expand by hiring labor in another country (for a lower wage). In that case, the owners of the U.S. company (which often includes the company's own employees) would benefit. Keep in mind that foreign labor is not necessarily a perfect (or even very good) substitute for domestic labor.
This is not a zero-sum game, and it's very easy to oversimplify matters. I'm not saying that U.S. workers are not or cannot be replaced by foreign workers, I'm just saying that it's possible that foreign workers could be employed where otherwise there would be no job.
A similar argument has sometimes been made regarding investment outside of the U.S. After all, if you invest money in China, you're giving up investment in the U.S, right? Well, it's not that simple. One paper, for example, claims that a 10% increase in foreign investment will lead to a 2.2% increase in domestic investment.
The point is, outsourcing/offshoring is a complex issue. Since it's such a new phenomenon, it will take some time for researchers to come to a consensus about its general effects.
"The universe seems neither benign nor hostile, merely indifferent." --Carl Sagan
Who's saying the job could have been created in the U.S.?
Exactly! Especially with the upcoming minimum wage increase, there are many jobs being created oversees that would not exist in the United States even if there was more protectionism.
Instead of Mattel opening a factory in China to make its stupid toys, they would buy them direct from a Chinese company.
As far as tech jobs, I think American companies like Google will be focusing on new technology rather than engineering implementation of old tech. Abroad, companies will be paying engineers to make custom software applications, which simply require one to know the language, not have big ideas.
Programming is a large field broken into 2 groups: The Art/Science, and the commodity. There's no need for overpaid American geeks to waste time making custom data management software for American corporations. The market for that got too big and the economy of scale on producing new programmers got cheap. As a programmer myself, I'm sad to say I didn't see it coming.
Also, there's no correlation between the loss of American jobs and offshoring. In fact, far more offshoring went on during the 90's than the 2000's and nobody can say the US had fewer jobs afterwards.
The nature of trade is quite simple: each party places a higher value on the good/service they're getting than the good/service they're giving. Therefore, American companies who outsource oversees have more capital at the end of the day, which they generally use to create more wealth.
Somewhere in there it trickles down, but you can take an economics class to learn about that.
Latewire
let me take a wild guess.
you're a young-ish kid, right? 20's or earl 30's tops?
your arrogance of 'prove it' shows you have no compassion for your own fellow US workers.
some day this 'stuff' will happen to YOU. and maybe then you'll "get it".
--
"It is now safe to switch off your computer."
In defense of the GP poster, I am 35, and it it has happened to me. However, I, like the grandparent poster probably does, I believe in being responsible for my own welfare.
When I was replaced by Indian labour (because as lead sysadmin I was the highest paid) I could have bitched about it, and whined and cried. I just said 'ok' and moved on. Picked up the pieces and went on with my life.
But then again, I am the type of person who has been working hard on self-reliance. Stuff like a lack of debt, an emergency backup fund etc.
Downsizing is not nice, but it is a fact of business in a capitalist system. It is this same system that brings us such inexpensive commodities. You don't have to like it, but it is the way that the system works.
So, IMO, the grandparent poster is not being arrogant, but rather observant. I am always looking to keep myself in a position where if I become downsized I can say "ok, no problem, thanks for that job, I am moving on now." But that was a choice I made in my 20's after being downsized the first time.
Try to hack my 31337 firewall!
We have a lot of uninsured that are young and don't want to spend the money. If they get hurt they can go into a an ER and get patched up without money or insurance, so why buy it? If they have a huge bill they just declare BK. Problem solved. Another big chunk of the uninsured includes illegal immigrants. Without those groups, the number of uninsured is pretty tame.
We have less vacation here because it's required by law in Europe. We don't want that. Your house payment due next week? Too bad, buddy. It's vacation time. No rational person would favor the Europeon work environment over the US. Look at their unemployment and especially long term unemployment. Many Europeans go for years without a job.
If the goal is to "Break Americans out of the middle class and put them into poverty" then we missed by a wide margin. Our "poor" people have cell phones, cable TV, cars, etc. Not many countries can say that. What you've missed is the opportunity for our poor people to buy more with their limited income because free trade lowered prices.
I think some insights from the field of economics would be helpful in determining the net effects of offshoring.
First, there are many software development projects which are "on the margin" meaning they're not profitable if developers are paid $90k but become profitable if developers are paid $30k. As a result, reducing the cost of software development by hiring Indians will cause marginal software projects to become profitable, causing more software projects to be undertaken than otherwise would. In other words, just because someone is paying an Indian $30k to do something does not mean he would otherwise be paying an American $90k to do the same thing; instead, without the Indian, he might not pay anyone to do it.
Even if there is still a net loss of programming jobs to India, that would just mean that the embedded cost of software would go down, because companies like Wal-mart would have to pay less to Oracle, IBM and SAP in licensing fees etc. As a result, their prices would be lower in any competitive market. (Note that the cost of enterprise software is an "embedded cost" in many of the things you buy). Furthermore, consumer prices would be lower for things like computers and software. As a result, people would have more money to spend on other things, and employment would expand in other sectors.
Although demonstrating it would require several more steps, we can be certain that offshoring will not lead to a net loss of US jobs across all sectors, and that the average American worker will have his income increased rather than decreased by it.
Also note that Americans' programming skills would not "go to waste" when they're laid off and forced to take jobs at McDonald's. American programmers could simply get jobs at $60k/yr rather than $90k because they would be much more competitive relative to Indians at that salary, but would still make more than working at McDonald's. At the new salary, many offshored jobs would move back. Only when the average programming job pays $7/hr would a programmer be tempted to abandon his skills and work at McDonald's. That could only happen if programming talent were so abundant worldwide that an American programmer's skills would be nearly worthless anyway. At that point it would benefit both the economy and the programmer if he learned to do something else.
"Everyone knows that the only jobs that count are the jobs in the United States. The rest of the folks in the world don't need jobs, they just need government cheese." - Jason Earl
I don't know what kind of jackoff thinks this is an insightful or humorous comment, but it's of interest to me that articles like TFA still make it to the mass media.
What a stunning bit of baloney it is to try to explain to Americans, as if to an idiot nephew, that no, when an American company opens a plant in Mexico instead of in South Carolina, it doesn't REALLY mean that the US workers are losing out on those jobs it just means...something else.
There are people who will say and write any old kind of bullshit as long as it advances their agenda. In this case, the agenda is obviously that we shouldn't get upset that big, rich, American corporations that decide to move jobs from America to the Third World aren't really taking anything away from American workers, they're really doing us all a favor because doesn't everybody have a million dollars in the stock market? And doesn't everybody own stock in My Big Corporation? So profits for My Big Corporation are the same thing as Profits For Everybody, see, and see, when My Big Corporation gets richer and richer, that money trickles right out of the wallets of the CEO and Board of Directors down their pants leg and into the gutter, where it then trickles into the municipal water supply and LOW AND BEHOLD it comes out the faucet in your bathroom sink. Easy as that. Ronald Reagan proved all this, so I don't see why I have to explain it to you again. When I GET RICH, the money actually trickles down onto your head like the piss that I tell you is really rain from heaven. Get It?
Now get with the program and by all means don't talk to any of your co-workers about this. You're not one of those commie union organizers, are you?
You are welcome on my lawn.
They are competing unfairly using government subisdies, and because government on both sides makes it impossible for the worker to move freely from one country to the other.
In comparison to the United States, most western countries have heavily subsidized Health Care and Education systems which may (or may not) lead to a greater employment in the tech and engineering fields.
One thing I have seen quite a bit of is large American companies outsourcing their software (in my case web) development to Canadian (and I'm told British and Austrailian) companies because they can not find companies in the United States which can deliver the product they want on time and under budget. I personally don't know why this would be but I wouldn't be surprised to hear that the companies who can deliver a product on time contract their employees out at an unrealistic rate; $200 US/hour for every one of the 10 employees working on a web-application for 6 months = $2,000,000 and a similar Austrailian/Canadian project could probably be done at $125 CDN/Hour (about $100 US/hour) for a total of $1,000,000.
Most free traders label everyone who doesn't agree with them protectionist, even though the label doesn't always fit. Lou Dobbs and everyone for fair trade do not want to cut off trade completely. They just want fair protections for the working class, which isn't an unreasonable request.
Free trade never has existed. And it probably never will exist. That's because corporations have built in their own fair protections for their own benefit: copyright, patent, and intellectual property laws. In all the talk and bluster regarding free trade, people like you never ever mention these protectionist laws that benefit the big corporations.
Big businesses are just as protectionist as everyone else. They just don't want anyone to see or point out their hypocrisy when they sing the praises of free trade and deride the rest of us for the same protectionism that they practice.
Sorry, that's hooie. Joe worker is in no position to compete when his costs remain the same and are relatively high compared to the nation that the capitalists can ship their capital to. If it's only a few percent, sure, possible, but to say someone in the US can live on a buck an hour or 5 bucks a day (whatever, some absurdly small number) is just retarded, because they are saying you should be able to compete at that price. And it *is* black and white that way. The big company says they'll ship the job to where they can save on the labor, to increase their bottom line and some CEO salary by a few million, because it's insanely cheaper there, yet they want the same loot for the product.
Yet, I am not seeing any big push by the capitalists or their stooges in government to drop rentals or mortgages or real estate property prices, or even freeze rates by law,nor utility bills, nor cost of transportation, nor local property taxes to pay for the illegals invasion, etc, none of that. You can go to the poorest cheapest cost of living place in the US and you still couldn't live on a buck an hour, even if your house was completely paid off and your car was completely paid off and you never needed new clothes. You still couldn't do it. Our society was set up over a long period of time the way it was, certain costs and obligations, and wealth gradually built up over a lot of manufacturing and then a ton of internal trade. You lose it as a worker in the middle of paying off a house and car and etc you can go down the tubes fairly readily now, and you do it in some area where the bulk of the adults are all in the same industry and all of a sudden everyone is laid off you can't even hardly sell your house. It's happened to any number of millions of people and this year with the ARM rates going up it is going to get worse.
And you want even more proof that this isn't working? Easy! They have to cook the books on the economy to make it look good, use every possible word parsing tactic to call credit "wealth" and get people to believe that fairy tale, they dropped some of the FED reporting on cash in circulation to coverup the on purpose credit expansion by running the presses and just adding zeroes to the data entries, they adjusted cost of living and took out critical necessities to make it look good, they reclassified jobs, and we are now without any shadow of a doubt and this is not debateable, just accept it the most in the red any nation has ever been, all within the last 20 years of this big globalism push. If globalism worked, we'd see some results other than cheap crap at walmart. You wouldn't see so many people against it. We'd still be a creditor nation, not a debtor nation. And if you think debt is wealth, go ahead and try it on a small scale at your bank, try to get a big fat loan approved by using your other debt load as collateral. Go ahead, try it see what happens. But nationally that is what has happened in the US and you and they call it good? If we had a true, not fairy tale but true good economy, 30-50 year mortgages would be unheard of, and those interest-only mortgages they push now? Wouldn't exist. Back before the big globalism "offshore all the jobs you can jobs inshore what can't be offshored" push (the war on the middle class in other words) it was 10 and 20 year house notes max and 18 month car loans and total debt (government/corporate/personal) was extremely low and savings rate was high.
You may call trillions and trillions in debt a good economy, IOUs funding more IOUs trying to fund yet more IOUs, while the CE whatever class keeps getting chunks of billions per year because they "work so hard", but I call it one international dump the dollar panic run away from great depression version 2. And it's going to be much suckier than the first one when it happens. And it is going to happen, inevitable, it's too far gone now.
Many regimes and empires and nations have tried the fiat-fairy tale styled economy dodge in the past, to just paper shuffle busy wo
Ahh, complaints about software outsourcing...
I studied through high school in India and came to the U.S. for college. I remember my CS classes. Our teacher was a dinosaur. He knew about pascal and some basic but he was taught by idiots and consequently his code never got beyond the Hello World level. We were supposed to be learning C++. He did mean well though and freely admitted being ignorant which helped immensely because we were forced to learn by ourselves. I count myself as being very lucky. Several teachers would have shoved what they learned by rote knew down our throats. The quality of software you get back reflects this education, and the price you pay for it. You want good software from India go hire a bunch of IIT and BITS grads and have them do it. You will pay though. Or alternatively, wait a decade or so. Software outsourcing is (paid for!) real world practical training for the next generation of teachers and thats something thats been sorely lacking.
As for the call center jobs... well you could complain about Indians who can't speak English (or American as the case is) but frankly the communication barrier has very little to do with accents or language. I know guys from here that can understand Indian accents easier than they can understand people from central Illinois and Texas. You guys try to imitate Apu frequently enough. Rather, the headache with support people is because they have crappy scripts to read from. Support would suck even if it wasn't outsourced unless you have someone on the other end of the line who actually knows the product he is trying to support. That costs companies money and companies that value their profits more than their customers know they can get away with crap service. Ideally they'd love to not bother with support at all.
Reality must take precedence over public relations, for nature cannot be fooled.
Who was so despondent after being laid off, she blew her brains out in the parking lot of the Bank of America IT facility in Concord California.
I think well remember that. The programers were offered severence packages ONLY if they would sit and teach their new Indian replacements their jobs. Who were flown here, from India, to learn their new jobs, and then flown back.
Lets see who desperately needs to reduce IT costs...
2006 - 3rd Quarter After Tax Income - Source Google Financials
Ohhh yeah, damn they are gonna go broke! Quick ship those IT jobs off to someplace where we can get shit code for pennies on the dollar that is nothing but slopped together cookie cutter trash based on Microsoft crap frameworks.
Hey KID! Yeah you, get the fuck off my lawn!
Corporations and big business cannot tarrif, create copyright and patent laws, etc. Governments have been doing that at the request of some business lobbies. If control over economics is revoked from government, bureaucrats have less corruptable power to exert on smaller businesses and individuals.
It's silly that people that are afraid free markets cite big business power as the source of the problem. In fact, that power is bought from governments because it is for sale. In a free market society, the law isn't for sale because it is out of the hands of corruptable men. The separation of economy and State is at least as important as the separation of Church and State for reasons that should be obvious to anyone that believes deep-pocket lobbies, not voters, control governments.
There are examples of economies collapsing you can learn from.
The best example is Argentina a few years back. What people did was organize themselves, skip using the wortheless currency at all, and started bartering their goods and services.
They did not run for their guns, their ran for their phones, called their friends and organized friendly bartering markets.
You guys in the US, sometimes are really scary.
IANAL but write like a drunk one.
"Our labor laws were enacted at a time when our economic status was radically different, much like a third world country of today."
Oh no. The oldest ones come from around the 1930s. Our economy was in a depression back then, but it was still radically different from that of an undeveloped third world nation.
Besides, the country we have been mostly talking about in these offshoring debates is India, and they do have extensive labor laws. The one thing people complain about is that workers make very little compared to US workers doing the same job, but the cost of living is much lower there. So you really cannot argue that you are trying to protect Indian workers by claiming their government needs to enact more laws.
"Duties and quotas are an option for importing their goods."
Thats still often enough to kill any chance they have at growing through trade.
"Further, developing nations can trade with any other nation they like and do not necessarily have to deal with us."
We have by far the largest economy in the world. If they cannot trade with us, that often means they are just screwed.
"Businesses are not labeled protectionist when they request protection in the form of intellectual property, copyright, and patent laws when dealing with countries that do not have similar laws to ours."
Lets look at a different issue, maybe that will make sense to you. Consider abortion. One position is that it is wrong to harm a potential child at any stage in development. That means abortions at any stage in development, the morning after pill, the birth control pill, and many other forms of contraception should not be allowed. Another position is that until they stick their head out into the real world, fetuses are completely worthless. That means abortion on demand is fine up to the moment of birth, and in fact abortion is a nice method of birth control. Now most people do not take one of these two views. Most people take something in between. That doesn't stop them from falling into two sides. A person isn't considered pro-life because they agree to restrictions to abortion in the final trimester. And a person isn't considered pro-choice because they consider something like the pill ok. The fact that they don't take the most radical views doesn't mean they do not take sides, nor does it mean they are hypocrites.
Similarly the free trade debate has radical positions, but most people take stands in between. The side arguing for more liberal trade policies (thats economic liberal, not political liberal) are often called supporters of free-trade. They may still argue for some restrictions, for instance they would not be against embargoes against North Korea because they are an evil communist country. The side arguing for more restrictions on trade are often called protectionists. They may still be fine with open trade to some degree and with some countries, they just want more restrictions than the free trade backers. If you don't like the label they have chosen for themselves, feel free to use a different one like "fair trade". But that doesn't mean people are wrong when they use the more common label, since they are effectively the same thing.
"It fosters or develops domestic industries by protecting them from foreign competition."
No, it protects them from any competition that attempts to compete by selling the copyrighted work. It is no more legal for a kid in America to sell a bootleg CD than a kid in China. In fact, most companies with businesses based on IP are more protective of it in the US and often are willing to turn a blind eye on it in other countries.
"If you go back and read what I wrote, I said that in discussions regarding free trade, people like you never mention that intellectual property law, copyright, and patent law are protectionist."
And again, you are wrong. Discussions regarding free trade often include discussions on IP law.
"
Mathematics is made of 50 percent formulas, 50 percent proofs, and 50 percent imagination.