Wednesday, June 10, 2009

“Stop outsourcing jobs!” “Outsourcing jobs bad for the US!”“Say no to outsourcing jobs!”:

The above title is an example of just a few of the opinions voiced by many Americans when the prospect of outsourcing jobs to India is discussed. It is hardly surprising and completely understandable that even the mention of the word outsourcing is often met with the reaction, “Stop outsourcing jobs!” “No to outsourcing jobs.”

Job opportunity and job security are issues that few people are immune to; the status of the job market affects the majority of us. As the majority of Americans equate outsourcing jobs with job loss, the negativity the process of outsourcing jobs receives is expected. Furthermore, not only do Americans feel that outsourcing jobs is a threat for one’s personal job security, there is a firm belief that outsourcing jobs is damaging to the US economy as whole. As a result the practice of outsourcing jobs not only touches one on a personal level but also one’s patriotic sentiments. On all fronts, the practice of outsourcing jobs receives a low opinion.

However although, “no to outsourcing jobs” is the consensus is, “no to outsourcing jobs,” actually in our best interest? Is the reaction received to outsourcing jobs justified? Does outsourcing jobs really worsen the US economy? Does outsourcing jobs really equal lost American jobs?

Outsourcing jobs is damaging to the US economy? To deduce if this is myth or reality one must take into consideration several factors.

1) What made America the richest nation in the World?

America is not the factory of the world like China or as oil rich as the Middle East. So what made America the richest nation in the World? Answer: America’s strong business institutions.

American companies are globally present in virtually all industries; food, media, software, automobiles, pharmaceuticals, insurance, hardware, construction, tourism, aviation...etc Most importantly US firms are successful in these markets not just domestically but globally too. Quite simply, America exports business to the rest of the world, better and more than any other nation.

2) The Globalized World we currently live in:

Whether we like it or not globalization has well and truly arrived. To succeed businesses must be aware of this and use it to their advantage.

Undoubtedly there are many ways, but one obvious way would be to take advantage of the rising Indian market. Currently India and China has a combined middle class of over 700 million people. This middle class is hungry for and spending big on US products. What does this middle class mean for American companies? Answer: considerable opportunity and new markets to sell to.

3) Outsourcing jobs is crucial to selling to such new world markets:

For US firms to sell to new world markets in India and China, US firms must continue outsourcing jobs! Why? Only the most successful organizations will be able to capitalize in these new markets. By outsourcing jobs, companies increase their efficiency, reduce their cost and in turn become more competitive.

India is renowned for its I.T technical talent, (hence the considerable size of the I.T outsourcing jobs sector). India produces more English speaking I.T graduates every year, than any other country in the world. If American companies stop outsourcing jobs, then Indian companies will have a distinct advantage over American companies; access to low cost professional employees.

Thus if an American company stops outsourcing jobs to India, how can that American company compete with an Indian company in the Indian domestic market? If American companies stop the process of outsourcing jobs, Indian companies will always be able to offer the more low cost service/product. By not outsourcing jobs, American companies would be unable to capitalize on the ever expanding Indian market. Additionally, by not outsourcing jobs, American companies would not only lose the Indian market but also other rising foreign markets e.g. China, Malaysia, Brazil etc. If American companies stop outsourcing jobs Indian companies will not only out compete American companies in India but also abroad.

4) Not Outsourcing jobs could also threat the US domestic market:

Indian companies or other foreign companies outsourcing jobs could also be a threat to US companies in the US domestic market. If by not outsourcing jobs, American companies can be out-competed in foreign markets then the same can hold true in the American market.

By not outsourcing jobs, American companies not only potentially lose foreign markets but also risk losing the US domestic market.

6) Europe and Japan will continue the practice of outsourcing jobs:

What about companies from other 1st world nations? Multination companies from Europe will continue outsourcing jobs to India irrespective of the US position. Will American companies be able to compete with well established multinational corporations that have considerably reduce their costs via outsourcing jobs to India?

7) Outsourcing jobs because of supply shortage:

Many companies start outsourcing jobs because there is a technical shortage for the respective position they seek to fill. Outsourcing jobs when there is a skills shortage enables America to benefit from India’s technical talent pool. By not outsourcing jobs this does not necessarily mean the position will be filled by an American at home. However by not outsourcing jobs this will reduce an American companies efficiency and competitiveness.

8) Outsourcing jobs reduces cost:

By outsourcing jobs US companies are able to reduce costs for the US consumer. $50 or $200 for the same software… you decide?

9) Outsourcing jobs leads to re-investment in the USA:

Outsourcing jobs enables US companies to be successful on a global scale. The revenue generated on a global scale enables US companies to re-invest in the USA and create new industries, sectors and jobs. Outsourcing jobs assists job creation in the USA.

10) Outsourcing jobs benefits HP and IBM:

Hewlett Packard and IBM obtain 50% of their revenues from markets outside of the USA. That HP and IBM are outsourcing jobs is undoubtedly justified when this enables them to increase their revenues from markets outside of the USA. If HP and IBM stopped outsourcing jobs they would be out-competed in foreign markets whilst also potentially risk losing the US market.

Conclusion:

In conclusion, outsourcing jobs has many beneficial implications for the US economy. The more successful US companies are globally the more successful the US economy is. The success of US companies globally is directly linked to whether they implement the practice of outsourcing jobs. Accordingly it is paramount the US does not prohibit or discourage the practice of outsourcing jobs.

Outsourcing jobs enables the US to take advantage and have access to India’s technical talent. In effect outsourcing jobs is a tactical masterstroke; it nullifies the advantage India has over the US and thereby maintains US supremacy… “yes to outsourcing jobs!”




19 comments:

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  3. Very informative post, it totally agree that it will surly reduce our cost. According to me it will surly help us for risk management also. For more details refer Advantages Outsourcing Jobs

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  4. This is very ignorant. You obviously are coming from a Pro Indian/offshore viewpoint. First, where do you get that India has "highly technical resources?" You do know that in the US most americans complain about having to interact with offshore help desks. As an IT professional myself, I've never seen an offshore company (in Bangledore, etc.) worth anything. I've had to see QA professionals let go at Warner Brothers, only to be told I need to now use Bangledore companies... and they couldn't follow basic rules... basic ideas. Getting one on the phone is like talking to donald duck. you can barely understand a damn word. None of us in our office could work with these people, and we went from company to company. You know what they setteled on at that time? Switching from India to a US High School that was doing free QA. it was like OMG, WTF. We had major online websites being QA'd by high school students!

    You wrote this in 2009. Lets flip the page to 2010. Look at the economy. You talk about how this causes companies to hire cheap labor and get our citizens to buy at lower cost... how many people are buying now? why are people not spending? because people have had job losses, bankrupcies, salary cuts. if you offshore enough, you have fewer people able to afford the so called "cheap products."

    What about all that "good quality technical resources" in India and elsewhere? it's nonsense. when you work with people who've *had* and been *forced* to work with these offshore counterparts you end up having people in the US fix all the broken code... retest all the suposedly "tested" code...

    Btw. when I worked a year at Yahoo, they too wanted to offshore... turned out that India was too expensive now... and they are looking to e. europe. You can always find cheap labor... but in the end if you take away the income of the average american and offshore it... and do that enough - it creates a division where the rich get richer... in the short run, and companies collapse in the long run - ala 2010. Just look at this corporate failures. Look at big business that can't get people to buy their "cheap products."

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  6. have you heard news about outsourcing? we don't know how long the discussions and debates about outsourcing would last.




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  7. I just hope that people will realize how outsourcing helps to people globally. we should not blame outsourcing the cause of low economy or high rate of unemployment. Nobody wants that to happen.


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  8. yes i agree,In some case we have double of project and income but same dead line mean end of project time at that situation. what we will made only outsourcing is good one. we need result that solve. which one is better to push the work. so outsourcing is really good for all.

    ReplyDelete
  9. It's great America can "help" other countries, that seems to be ALL we do anymore...Our country is going down the tubes though however in the process. I being a business woman understand the reasons listed here, but there is a terrible back lash going on as well. The Americans that are losing their jobs are now unable to afford these products, and we have now strengthened these other countries economies, so they are now improving their companies and even recruiting talented American workers! I live next to Home Depot's Corporate office, and speak with many of the Indian families that were brought here by Home Depot, IBM, etc... and they are starting to get offers from the companies in India to "come home" and work for better pay, and they are doing it. Then these big companies just completely move there to India to get a constant flow of new workers...I have been repeatedly sent job offers from companies in India through LinkedIn, and they are better offers than I have received from any US companies. This is sad. Corporate America needs to quit trying to "cut costs" on labor, and get back to what originally made this country the world leader - improve our products in new and creative ways! If we create a new product that the world will want, America will lead the world without giving our American workers the shaft.

    ReplyDelete
  10. This article is very "Pro-Foreign" Countries, with respect to the USA, but what you're saying is 90% untrue about how the U.S., particularly it's people, are being adversely affected.

    1. Your statement" Outsourcing jobs enables US companies to be successful on a global scale. The revenue generated on a global scale enables US companies to re-invest in the USA and create new industries, sectors and jobs. Outsourcing jobs assists job creation in the USA."

    That's nothing but a 100% LIE! Since outsourcing started in the 1980's, the ONLY people who benefited from it are the Top 2% of Earners in the U.S. 400 People in the U.S. earn more than the entire bottom 50%. And that 50% are now on either Low Income, or Poverty Income. In the 1970's, half of that bottom 50% were "Middle class", now they have dropped out of that Income Range. And it's getting worse by the year, due to Outsourcing directy. The Profits do NOT go toward helping "Ordinary People", but only the top 1%, who have become Billionaires, and do NOT Invest virtually ANY of those Billions in any way that benefits American Labor.

    2. You said "Many companies start outsourcing jobs because there is a technical shortage for the respective position they seek to fill. Outsourcing jobs when there is a skills shortage enables America to benefit from India’s technical talent pool. By not outsourcing jobs this does not necessarily mean the position will be filled by an American at home. However by not outsourcing jobs this will reduce an American companies efficiency and competitiveness."

    More Untruth there! Example: AT&T Just moved an entire Tech Support Dept. to India, and my friend lost her Job, and is in her 50's now, and can't get any regular work. But there are at least hundreds of thousands of Americans qualified to do the work that was outsourced by AT&T, and many other Companies. It's NOT outsourced due to lack of workers, it's done for PROFIT for the Owners, Stock Holders, CEO's and Administrative Managers, who are the ONLY people who benefit from the Outsourcing. It's causing Americans' average salaries to DROP, since the 1980's, by over 20%, inflation adjusted, and Pensions have been eliminated, and Health Care has been lost by 40 Million Americans, as well. There is NO "Trickle Down" benefit to American Workers, in any way, by Outsourcing! In India & China, most workers are paid from 50 cents to $1.00 an hour, usually no more. The Apple workers in China are being paid $17 for 12 hour days, slightly over $1/hour, but still WAY low by American Standards. While Corporations net Trillions of Dollars in Profits, yet no longer even pay for Health & Retirement Benefits in the U.S., or most other Countries, other than Europe.

    #3. By outsourcing jobs US companies are able to reduce costs for the US consumer. $50 or $200 for the same software… you decide?

    One more Lie! I worked in the Computer Industry for 25 Years. And today, with everything being produced Overseas, the prices on Software are the highest that they have been in 40 years! If your Argument was TRUE, whenever a Company moved to China or India, where their cost goes down 60-80%, their prices should have dropped by at least 40% Immediately, but they never did. The difference goes to the Super rich, it is NOT beneficial to the Public in America. All that Americans get, is to Lose their Buying Power & Security, because NO Job is safe in America since the late 1980's, and when someone gets laid off of a good job, they go from $40-70K per year, down to $9/hr. ...Less than 20K/year. HOW do they save money that way?

    ReplyDelete
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  12. Thanks ! for sharing this wonderful news with us.Alternatively specially create a great blog for Outsourcing
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  13. Outsourcing definitely hurts the USA, don't let this author fool you. It is sharing the wealth with 3rd world countries, wealth that we don't have, and biggest problem is these people on the receiving end of outsourcing are getting EXPLOITED!! Do you really think any business would outsource if there weren't great profits to be gained?

    Don't buy it, it's a lie and if it keeps on our country will get worse off.

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    Replies
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    2. IN my opinion, I dont think that outsourcing is the source of reasone which make American lost their potential jobs.

      https://savvycomsoftware.com/en/savvycom-top-25-it-outsourcing-companies-by-clutch/

      Delete
  16. Good article and well explained with details thanks for sharing.
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