I outsource everything. I outsource repairing my car to my mechanic. I outsource all my legal matters to my law firm. I outsource growing of my vegetables to the local farmer’s market.
Outsourcing is good – we can not and should not do everything ourselves. You don’t need to own a cow anymore if you want milk. The industrial revolution was built on increased specialization.
The recent controversy over outsourcing is massively protectionist and xenophobic. People like Lou Dobbs and John Kerry believe that outsourcing is good as long as it is done by people in America. But they believe it is bad if done by foreigners – especially by people who are yellow or brown. Their xenophobic and borderline racist reactions should have no place in a globalized economy.
When Nike outsources its manufacturing to a plant in Malaysia or Citibank outsources its customer service to a call center in India, the American consumer wins because we get cheaper goods and help create markets for our goods abroad. Remember, America has a gigantic trade surplus in services and in intellectual property. Unlike manufacturing, only people in nations with a growing economy can afford services or IP – so it is in the U.S.’s best interest to help out other economies through trade. Trade, not aid, is the best way to create a worldwide economic expansion.
There is also a myth that American programmers are losing their jobs to people overseas. Nonsense. No good American Java or C++ programmer has had their job outsourced. If you are a COBOL programmer and you haven’t updated your skills in over 30 years, you might be at risk. But you probably would be at risk anyway since the COBOL market is shrinking and the Java market is growing.
Summation: Outsourcing is good for America and also good for the countries that participate as our off-shoring partners.
I think the last paragraph might cost you some goodwill points in the programmer community — I know some very good programmers who have lost jobs to India (I’m not knowledgeable enough to determine on my own that they’re good, but that’s what they tell me. Besides, I’d guess that the criteria used to determine outsourced v. retained programming jobs is less quality-of-employee and more changes in costs associated with outsourcing particular positions).
Before I stray too far from my reason for posting, I want to suggest that the heading be revised to “Offshoring is Good for America, so Long as Innovation Picks Up the Slack.”
Offshoring results in lower prices, which is great for American consumers. But it also creates job loss at home, which leads to lower income, which (barring artificially lowered interest rates) leads to reduced spending and a weaker American economy. How do we keep people employed (read: earning and spending money) in the long term? Innovation.
Innovation is the important flipside to how offshoring ought to work in the long term. To avoid job loss (in quantity and quality), American industry needs to be innovative, its workforce mobile, and its government accomodating. We should be pouring resources into new technology, into biotech and nanotechnology, and into the Thing in That Guy’s Garage that will change the face of the next ten years. We need an education system that permits rapid retraining and qualification of displaced workers. Government should be fiscally responsible, so that private demand for investment is not crowded out by government deficit financing. It should not hinder the development of potentially powerful new areas like stem cell.
Outsourcing and offshoring can be great things and have gotten a bad rap of late. But it’s important to remember that competitive advantage is based on the idea that, while certain tasks are handled by others, you will be devoting your resources to more productive pursuits.
Auren,
I agree with you for the most part — and I’m one of those crazy liberals. Except I’m not. I’m socially a liberal, but I also believe in the “if you work hard, you can win” ethic (assuming all else is equal, such as _rights_). I’m a 22 year old programmer and I’ve worked hard enough that I know my job will not be outsourced.
Now, I need to be careful here. I might come off like saying that those that have lost their jobs aren’t working hard enough. In fact, I believe they aren’t working _smart_ enough. Specifically, they probably need to learn the “right” new technologies as well as get a bit more business savvy so they have some contacts in the industry that will support them. That’s how I’ve survived (even in Portland, where the market isn’t exactly like the bay area).
However, I also believe that if a decision is made to take away someone’s job, the government should get involved to help those affected out. Maybe you heard about Maytag: http://biz.yahoo.com/ap/040914/maytag_departure_1.html. I think those people should be helped by the government, because otherwise an entire town would be totally destroyed by the action of one company. Since many of the workers have families and can’t afford to (easily) make a full 180 on their career direction, I believe that the government should pitch in helping them out. It’d be a much better dollar spent than say, welfare.
To solve this problem going forward, we need better education in high school and college as well. When my father attended Stanford and Santa Clara, they didn’t focus nearly as much on the technical side of civil engineering. Rather, they taught a broad spectrum of technology (he learned more Electrical Engineering that I did as a CS major) as well as business classes. He was prepared for a multitude of careers. Toady, the world is so fast-paced that schools try to teach such specifics (such as the latest version of Java) that they loose sight of the purpose of education.
You’re another person that believes in the myth that Cobol programmers are dinosaurs. I’ve been out of work for 18 months now. The reason I couldn’t keep my 14-year contract with a local health insurance giant was because they turned over their contract Cobol work to the Indians. Believe me, the work is there. It’s just being done by cheap foreign labor.
i have read your blog. i have found it quite interesting, useful and helpful in sharing knowledge resources.
http://www.offshoreoutsourcingworld.com
i pretty much agree with Auren for the fact that the more effort u put into your work the better result and more apportunity u get. A lot of people (outsiders) argue the issue of outsourcing without knowing what it’s all about. even though i’m not that experienced i believe that we can not and should not do everything ourselves because of scarcity, experiences, and technology that’s been used. i think outsourcing is good because it makes people bring money home….
Thank you for posting. IT industry nowadays keeps on growing and in line with this, the process of outsourcing also grows. This means that outsourcing is very useful in the company and to the others. In order the company to last long in the industry, it should adopt the new technology and put some updates if needed especially the programmers. They should not merely focus on the same language over a year/s. Updating and practicing another language is a big step in your life as a programmer because new learning/s will occur and a brand new language learned.Good job!