Outsourcing is good as long as the company saves money. Forget about contributing to the American tax base and internal buying power. Americans will buy whatever is the cheapest.

Let’s say you make your product in the U.S. and your competitor makes a similar product that is made in China. The average consumer will buy the competition’s product because it will probably be cheaper, even if it is lower quality. Americans would rather spend 2 bucks for five cheap products than spend 15 bucks for one quality product. Economics of the American consumer is rarely based on longevity. It is based on what can be bought today with the money one has.

So if you are a business and you can outsource to another country and save money, do it. Americans do not care if your American company goes out of business or not. You have to look out for yourself in this country.
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Five years ago I moved my company to Costa Rica. By moving into a free trade zone we were granted an 8 year exemption on paying Costa Rican income tax. For years 9-12 we pay 15%. I moved offshore because I felt the US tax law was unfair in two areas.

1. Large US corporations can avoid US income tax by simply doing a corporate inversion. They basically keep all of their operations in the US while setting up as a corporation based in a tax haven such as the Bahamas or Belize. They may employ a few people in the new home but in some cases they just open a post office box.

My Costa Rican corporation receives no protection from the US government. However, because I own more than 9% of the stock, we are considered a “controlled” foreign corporation by the IRS. We avoid US income tax under the manufacturing exception. Under the IRS rules we must perform all of our manufacturing inside the country of incorporation. We can’t outsource anything to China or the US. If we did not follow the rules and we did not meet the criteria for a manufacturing company, all of the income of the Costa Rican corp. would be taxable in the US. Even though we are a Costa Rican corporation with no employees in the US, we must file our operating results with the IRS on an information return each year.

Had I kept my company in the US, I would have been paying 35% of my profit in taxes while large corporations who have set up a PO Box in the Bahamas pay nothing.

2. The 35% tax rate for manufacturing companies is too high. A stock broker who does not create jobs and simply churns the economy by buying and selling stocks is taxed at 15% and does not have to pay social security taxes. A manufacturing company that does create “high quality” jobs is taxed at 35% on its profits and 7.65% on its payroll. The US worker needs to lobby Congress to change the tax code to attract manufacturing companies. As a start I would suggest raising the capital gains tax back to 25% and lowering the corporate income tax to 25%. Income is income. It should all be taxed the same.

I wonder how many of those complaining about offshoring make the weekly trek to Wal-Mart?

We’ve been outsourcing production of things like bananas for years.

If it is a commodity product, like nuts and bolts, once the other countries have the manufacturing equipment, their businesses can easily undercut American manufacturers. The electronic companies have been manufacturing overseas for decades - my little HP-25 has components made in Singapore, and it was manufactured in 1976 - 31 years ago.

But let’s talk about something else. A certain Russian dictator once said to the United States, “We will bury you.” It didn’t happen.

Now we are going to be buried in garbage - the tremendous amount of “stuff” made in China. Whether it is broken plastic toys or scrap electronics, American gluttony for “stuff” is going to backrupt our country and the discards will trap us in clutter.

ISomewhere along the line our government and business leaders have forgotten what brought us the economic prosperity that we enjoy: we created the technology, owned the products, markets and the people that produce them. People here need jobs and despite the government claims to the contrary, they are willing to work for those jobs at an honest wage. If our government would not allow millions of lower-paid workers to enter the country, then perhaps the jobs market would come back?

Roll back many years, and think about the Ford model; if Ford had outsourced all of the jobs, parts, and products, and his workers were paid accordingly, who would have been purchasing the originally lot of his new invention? By paying an above industry wage, his employees could afford his product. When Oracle create the first RDBMS, what would have happened if the technology were being written oversees? I believe in quality. I spoke to Dell the other day about the mere fact that I had to make 4 phone calls requiring me to spend two hours in unproductive time just to get the person in the “cheaper support center” to understand my problem and more importantly spell my name correctly.

You can thank the likes of your Congressmen and Senators for allowing the quick and reckless destruction of our middle-class. Have you ever asked yourselves that after they outsource all of the middle class oversees, who will by those Ford, Chrysler, GM, Toyota products? Who will buy the middle income level housing? Is it not enough that we send billions oversees for oil, must we help ever nation on the planet enrich itself at our own expense and destruction? Why can we not get the economy growing? Well look around and see what people drive, eat, wear, etc. and you will see where our money goes. We need a good old-fashion made in the USA program. The first person to stand up for office and say “I’m mad as hell, and I’m not going to take it anymore” - will get my vote.

I don’t have a problem with off-shoring but I do have a problem with companies both off-shoring and bring in H1-B visa holders to take the jobs that are left. I am a consultant and this practice is rampant from what I am seeing. Add to that all the H1-B holders taking jobs in American companies that are not off-shoring and taking a potential job from someone who has lost their job through off-shoring. I though H1-B was created to bring in skilled workers who had skills that were specialized and could not be filled by an American. Guess what? There are thousands of H1-B workers taking consultant, programs and other system jobs while thousands of American are being laid off. I know people who were laid off two years ago from IT jobs and they can’t find another job. It’s because the H1-B visa holders will work cheaper.

I do not support offshoring in any way.
Lets grow our own food.
Lets generate our own energy.
And lets kick but on quality of product
and quality of service.
Innovate.

I work for one of the worlds largest Fortune 500 Tech Companies, I have fought long and hard to convince them to keep our customer service in the US. They continue to say they can get a 3 to 1 headcount overseas versus the US. I understand that thought, if you are just simply comparing bodies, then yes it is cheaper and why wouldn’t you do it? Here’s the part that everyone seems to be missing. (Communication and efficiency) Our customers tend to have to call in multiple times to resolve a single issue that could have been resolved on the first call if the Agent from India, Costa Rica, Kuala Lumpur, etc. could communicate well. I am not just talking about their ability to speak and understand the English language, it goes way beyond that. They simply don’t understand what we are trying to tell them what our symptoms, problems and issues are, so they end up off on the wrong track and a lot of extra un-necessary work is created, not to mention the upset customer. I am a strong believer that to continue to be a successful company and continue to grow your business and convince other potential customers you can serve their needs better then the competitor, you have to consider there are certain places you can’t go for the cheapest option and in my opinion that is in customer service. I believe a customer would be willing to wait on hold for a representative longer if they knew they were getting someone that would understand them and could solve their problem quickly and efficiently. So what if the overseas guys can take 300 calls an hour for the same personell cost as we can in the US only taking 100 calls, but keep in mind 200 of those people will be calling in a second time and another 100 will be calling in 3 or more times. I am not sure what else I can do to prove my theory to them, I guess when they realize the importance the customer puts on quality customer service and when the contracts don’t get renewed they will take a look back and realize the small amount of cost savings weren’t worth the long term affect.

Ford, GM, and Chrysler will sell what vehicles they can in India and China, make what profit they can there. Then when India and China become mature markers, inflation will be the last feature of all markets (See Alan Greenspan’s new book). My thought is the size of the US compared to India and China, and I’m taking a good look at how the poorest of the poor live in those two countries, because that may be the worst case scenario for the US

Sort term gain for ill managed companies is exactly what offshoring provides. Save a few dollars and be a hero for the quarterly and annual filings. What is missed is that we hurt the tax base of our country, foriegn payrolls are not taxed. Also our internal buyiing power is lowered. Offshore 10,000 computer analyst to India, there are 10,000 less cars Ford, Gm and Chrysler will sell.

The problem is universal and timeless. The only solution - in a small phrase for businesses or individuals - is to innovate until you find a Niche that works for you. It’s stupidity to claim that all niches have been exhausted. It’s the subjects, rather than the niches that are exhausted. There have never been more niches in history than now…

You can’t and won’t beat them. The first thing that needs to go are the unions. Why pay workers $25 an hour when a “normal,” non-union worker can do the same thing for $10 an hour? Unions started out as a good thing, now they’re a pox on the whole system. Then there’s the CEOs who make millions, the cost of gas, fear of lawsuits, etc. America has backfired unto itself. As un-American as it sounds, I’ll buy foreign before American (if the quality is the same) as an act of protest until American workers stop screaming “we want more, more, more.”

We outsourced a low cost line to China for customers who only shop on price. We mainly use it to up sell to our higher quality, higher technology US made product. By upselling like this, the China line is only about 10% of our business.

I haven’t beaten them. I did computer programming for large corporations and it’s simply impossible to overcome the imagined cost savings of using twenty-something Indians who can come here, or stay in India.