Overseas outsourcing heats up again
As sales drop and business owners look for ways to cut their overhead, sending jobs to cheaper locations is an option back on the table. What do you think of outsourcing as a way to cut overhead?
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DiggReasonably priced labor? The rate in China is $1.87/hr and $0.53/hr in Vietnam fully burdened. An IT professional in India makes ~$9K per year. We do not want to compete with that, we can’t destroy our life.
The current tax system in the US requires companies to pay SS, medicare, unemplyoment, environmental costs, medical… Change from an income tax to a consumption tax at consumer goods and business to business and put the basic developed world costs on all products and services consumed in the given country. Then the 3rd world things are now on a more level field. Keep the total tax amount the same just redistribute costs to all profiting form a countries consumers and not just domestic sources. Otherwise, we race to the bottom.
There are several points to make here.
1. Outsourcing creates an artificial supply/demand of talent. Take for example engineers who are able proficient with IPv6. You outsource the work to country x; they are now paid to develop the skill set in their country, and the engineers in the US who can do this are fewer thus, jacking their salaries up.
2. Businesses are in business to make money, which creates jobs, all good. However corporations have completely swung to the profit at any cost side of things, thus, it does become a race to the bottom. Corporations, workers and those investing in the stock market must come to middle ground as it relates to profits, salaries and ROI, or there will be no middle class.
Ok, so how do I outsource my housing expenses and taxes? Since employers are so eager to outsource my job, my only recourse is to outsource my consumption. NO more buying American. I’m just going to hoard my money, retire to a cheaper country, and THEN spend.
When I was a Chief Technology Officer for several dotcoms, I used to think offshoring was bad. I needed to speak with my architects and project managers in person, so we paid good salaries and did things internally. When I was working with some troubled companies, doing turnaround management, I did not have sufficient funds to do everything in-house and was forced to offshore. After getting some recommendations, we started working with a smaller vendor, who bent over backwards to please us. I was delighted with the work quality and how fast things were happening. We were able to develop and deploy high quality software in record time, at a very low cost. Surprisingly, the work was better quality than what my in-house developers were able to do. It also helped that my offshore team worked 6 days a week, giving me a 20% additional performance, with no additional effort. This helped turn the company around.
On the down side, the communications is more challenging and there is more room for error. You also need to be aware of the cultural differences as well and be razor sharp in your emails and phone conversations. Having spent time in different countries, this wasn’t hard for me, but I can see how it may not be as easy for others.
One thing which became clear was that for success, there needs to be a local, high level person from the offshore vendor who is very experienced in software development. This is not a project manager shipped from India or China who repeatedly asks what do you want and communicates back home. Someone your development team can respect, with proven software development background in the US, who will push back when necessary and can foresee problems before they happen. Perhaps a tall order, but it works. We use this hybrid offshore development method with very technical former CTOs and Directors. Even with the higher cost of US executives managing the project and handling client interface (who wants to call India at midnight for a conference call, do you?) the projects are still coming less than half the cost of doing it internally.
My recommendation would be to forget discussions on whether we should offshore or not. Offshoring is here to stay and it will grow. Just a law of economics. Our cost structure is not aligned with the rest of the world. Most of the comments made against offshoring are made by people who are not running their businesses and are not faced by the realities of having a business one day considering closing it down the next day. Change is always hard and sometimes there are casualties. Business is business, it is not a charity.
So what should we do? I believe INNOVATION is our way out. We create new products and services that are much better, cheaper, faster. That open up new possibilities, that solve our customers’ pain, help them grow and profit. Let’s not argue about offshoring. Let’s talk about how we can grow our businesses. Look into hybrid offshoring with companies focusing on quality and service, looking for long-term relationships. These companies are not looking to make money on one project and then move on. They invest in the relationship hoping that they will get more projects from you if they do good work. Both sides win, as the goals are aligned. Use the global reach we have today to reduce costs, stay competitive and innovate. And if you still have money left over, use it for sales and marketing. If your market is in the US, as in the case for most small and medium sized businesses, those dollars will be spent in the US.
In these tough times, how can we afford not to look at these alternatives?
this is not a matter of Supply and Demand for labor — the system is stacked against us (Americans) because the other countries have different laws regarding treatment of their labor, and environmental laws, etc.
Either we need to equalize those rules or drop this Globalization trend that is supposedly “inevitable”. It’s not inevitable it’s by explicit policy and is not even free or fair trade. Make the playing field equal if we are going to play the game.
Well if some of the UNIONS would get real on their labor rate and benfit plans, maybe there would less job outsourced.For example I am A GM auto dealer, with UNION plant workers and health plans, look where GM is at? I bought a Honda franchise in 03 , Thank God, or we aould have went under, I have no problem with outsourcing, because many of the American Union workers are over paid, and lazy, they have NO IDEA what they do the bottom line of corporations, and even if they did I think they would not care, they want something for nothing. The USA did it to their selves, not lower wages and job benefits or move to other countrie to get a out sourcing job their Union selves. I am a 3rd generation GM auto dealer, and I have seen GM go to hell and a hand basket.I think the government should let them bankrupt, adn reopen with out the union and babyfits(benefits)!!
Great point. If the corporate CEO’s believe outsourcing is the only solution why should such company exist as a US registered company and US tax payers should bail them out when these firms are creating jobs elsewhere.
Being in business (no matter the size) means earning revenues and cutting cost to generate a modest profit. You can increase your sales by outsourcing your sales reps or you can cut cost by outsourcing specific jobs that can be done elsewhere. Either way, it means staying in business and paying the right amount of taxes. If business goes bankrupt, then no taxes will be paid. So, you make the balance to satisfy yourself or the working public in general.
unfortunately..today there is no job that is NOT being outsourced!!!
IT, manufacturing, Medical, accountant…u name IT!! now even medical surgery are being outsourced.
I was talking to a friend, who works for state govt. When Govt tried to outsourced the Tech job, there was huge drama. So, instead of giving the contract to Indian IT firm, govt hired IBM/Accenture/CSC at SIX times higher rate. These so called US firms..shipped worked to india offices!!! Same job for SIX times more billing…job again going to india!!!….How do you define this?
Global sourcing is here. And this is not just about outsourcing. Global sourcing is an inevitable and radical departure from prior normality and a lot of folks are going to wake up to a difficult life as this crisis continues to unravel. Global sourcing means global competition for outcome, not expectation. Global competition for jobs, not personalities. In a downturn such as we have, the days of saying that cost is not a differentiator are gone (at least for now). This is huge. The range of options for getting the job done around the world is increasing daily – and this has very practical implications for domestic economies such as the US where there is (now) a massive cost-of-living and expectation disconnect with the rest of the world. The path of change is a difficult one sometimes but foolish is the one who stands in the path of change. Better to figure out how to move things forward through investment in education, technology and breakthrough advances – that will provide the economic catalyst for leading the next wave of growth. More at: http://seismicshift.wordpress.com
Let me give you an example. I work for a fortune 500 company with worldwide operations, that is based in the United States. If I need to move a phone extension two offices over from where my office is (same floor, same building), I have to make a phone call that connects me with someone in either India or Australia, who then tells someone locally to move the phone extension. Now tell me again how this is helpful to the American economy. I don’t mind outsourcing to another U.S. based company, but for heaven’s sake, keep the jobs at home!
Outsourcing is a result of labor costs in the US being to high, and public aid for people being too extravagant. People have to be hungry for a job (the bookkeeping example). Then they will take the job at a market rate.
This is nothing more than supply and demand (taking cost into account). The supply of reasonably priced labor in the US is lower than the supply from other sources, potentially even reasonably priced labor from one state to another.
Can we outsource our Federal Government? We just pretend we elect someone but the person elected hires someone better than him? Maybe someone in China or Russia tells the elected person whats best and not. In that way, we give more free time to our elected officials so they can spend more time with their family and their mistress. Hey, most of them outsource a wife sometimes… or most of the time.
I will stick to my standard of “BUY AMERICAN”. I check everything I purchase and will absolutly not buy anything that’s made in China or India. I will make an exception for European made goods (Germany, France, England), but if a company outsources, I can’t feel good with my purchase…
In this case, much of the outsourcing is to other US companies who provide the same service at less cost. Just like the people buying products outsource production by not making it themselves.
I do agree that many jobs are being outsourced due to simple cost differences; but this is not the only case for outsourcing.
In my case, it is a seller’s market for accountants. High demand, low supply equals leverage. Very difficult to find qualified candidates who actually want to do the work (not everyone gets to be a consultant). So I am looking at opening an office in Mexico, where I can find bookkeepers who….want to keep books.
TO TVL
Problem is that the middle and low income jobs that are being sent overseas means that people in this country do not have money to spend on products so companies will start going out of business anyway.
I think out sourcing should be illegal.it taking jobs from Americans so the rich get richer
Outsourcing is not a long-term solution. How many of these businesses are well-managed? Putting the blame on the cost of labor and sending the jobs overseas may bring short-term relief but will not make a business a resounding success. Why should this business be allowed to register as US business when all the employees are not in this country?
Guys,
Before talking about outsourcing all of us need to understand the other side of outsourcing. It’s called “Insourcing”..No one talks about the effects of insourcing..what about all the international companies like toyota, honda, samsung, nissan that have set up operations in U.S. and employ thousands of people… Has anyone ever thought about it? Has any politician ever mentioned it in any of his political speeches? We need to understand its a two-way street…Companies are no longer domiciled in U.S. Its a global market place and companies have no choice but to compete on a global basis. So let’s stop looking at only one side of the coin….
People are posting such hateful comments without reading the article thoroughly. What it stated was that MOST of the outsourcing for Inside Avenue was in the US, such as Wisconsin, Iowa and North Carolina-states that desperately need jobs. In fact, 95% of our outsourcing is here in the US.
Secondly, what good would a business be for Americans if it goes bankrupt? We are not talking about multi-million corporations here. We are talking about a small business owner, trying to survive. Is that a bad thing?
We need to be more open-minded and understand the real issue before making such righteous comments. People need to understand that most of the products they use, most of the things they eat, most of what they use everyday, are being made overseas. Are we going to accept that this is a global economy and try to work with it? Can we do things better, be smarter so that we can compete?
I say that’s the better alternative than being self-righteous and call it patriotism.
Lets put a website together that we will not outsource overseas and stop buying products or services that does outsourcing. We need to get together that are againts outsourcing and do something or just keep on crying… weweewewewewwew… DO SOMETHING!!!
People are against outsourcing here but you should realize that USA would not be rich if people in the world did not buy the products from companies like Boeing,Microsoft. If everyone thinks, jobs in my country should stay in my country and I will not buy products from other countries, then we as a world would lose. When you outsource your jobs, you are creating a new middle class there and create competetion for people here. The new middle class there buys US products which in turn creates more jobs here. Outsourcing and fee trade are here to stay, dont wine but try to compete and make the world a better place with a healthy competition.
Not only should tax breaks be given to companies who keep ALL outsourced jobs in the U.S., but I favor an additional heavy tax penalty (along with zero government subsidy funding now matter what shape they are in) for any U.S. based company that sends so much as one job overseas. Want me to buy your American made product or service? Then keep your jobs making that product or service offering in America. Let’s stop making other countries rich on the backs of the American people.
I think it is a fantastic idea… I consult with many small and mid sized business that would literally go out of business if they didn’t find a way to lower their overhead costs. This would result in WAY more jobs being lost, so I think there is a huge net benefit to outsourcing. By the way, generating growth in other economies is not all bad for America. As they grow the import more American products (computers, software, food, etc…). We are in a global economy now protecting jobs and putting up a wall to competition is exactly what Russia did in the 90’s and we can see where that got them.
I just looked at the InsideAvenue.com website. It’s actually some of the ugliest stuff I’ve seen.
I say start a boycott of her site. let a thousand emails fly.
it seems to me that cutting costs by outsourcing a race to the bottom.
Are we not turning into a nation where only the most menial jobs are in America? Everything else will be outsourced and most Americans poor.
If people want to outsource I guess there’s nothing that can stop it. But at least there should be somekind of penalty tax paid by people doing the outsourcing to cover the lost revenue from wages and associated buying.
Otherwise we all end up in the deep hole we dug and no ladder out.
Eating the golden goose
I hope she only sells that worthless crap to the places she outsources to.
No, let me think. Thay can’t afford to buy anything. Soon her customers here will be unable to buy, either.
Boycott this loser!
Its a great way to DESTROY America, faster than a terrorist!
No jobs + nocustomers, long term. She should have gone out of business. Then do something useful for OUR economy.
This is a big part of our economic crisis, destroying America one job at a time.
I hope everyone takes note of her, and avoids her business.
Outsourcing of work that should be done by Americans should be banned. Unless steps are taken to stop it, half the American workforce will be on welfare, turning to crime, or both and I could not have come up with a better combination to destabilize this country, to the brink of revolution.
Greedy corporate executives send good paying jobs overseas, make their employees may more for benefits (assuming they get them at all), and push for more people to come into our country on H1-B visas. These actions have been an outright assault on the middle class people in this country. People are either unemployed or have less disposable income. Now corporate American is complaining that no one is buying their products/services. They have destroyed their own customer base and have now reaped what they have sowed. Companies like Wal-Mart which have pressured their vendors to move manufacturing jobs overseas to lower costs, to companies like IBM and Microsoft that have sent good paying IT jobs overseas, are responsible for this economic situation we are in (to name a few).
Americans love to spend money. Pay us well, and we can keep our economy thriving. Unfortunately the pinheads in the boardroom, collecting their multimillion dollar compensation packages, refuse to acknowledge this fact.
Thank god that contractor jobs can not be outsourced, and at a minimum people need to come here to the US to build (without getting too political). The bottom line is that our own stupidity and greed has given way to other countries who are more loyal to themselves. Read the labele and demand made in America. Pay the extra few dollars to support the rebirth of America. Sometimes you will have no option. BUT WHY DO RETAILORS NOT PROMOTE A SECTION OR SIGN WHEN SOMETHING IS MADE IN AMERICA? There are a hundred reasons why they do not, but they are unpatriotic. My company is http://www.MyOnlineToolbox.com that specifically helps contractors run their business more efficiently. Wen had many choices to outsource our development for lower rates but have instead kept all programming here in the US. Now that is for America by America! Join us in helping turn the country around.
The disease of apathy starts with greed and neglect..the two go hand in hand together. When workers realize they are only a cog in a wheel and the only loyalty that counts is theirs, to a company that holds your job over your head like a carrot, people start looking elsewhere for a job where their talent will be appreciated AND rewarded financially.
With outsourcing, American companies started looking at the fact that they were matching social security, medicare, 401K’s etc..and to cut costs companies are outsourcing to other countries, who don’t care about your business or if it thrives or bankrupts, they care about their paycheck. More apathy.
I can’t even understand the people when I have to talk with them, and it scares me that they are out of the United States, where we have protection laws (supposedly) for identity theft. These people ask your name, address, acct number, social security number. It’s bad enough having to supply those items here in the US but I decided, for many reasons, that I will no longer buy anything not made in America or do business with any company that I have to talk with someone in another country! Our trade agreements are not FAIR. We spend alot more than they do in trade, it’s not an even balance. Another thing, their products are cheap and even dangerous anymore. Poison in childrens toys, dog food, chocolate and who knows what else?
I agree wholeheartedly that outsourcing is a bad idea for America, especially at this time when we need to get back on our own feet. Billions are being spent for naught, not helping the people who have been layed off due to company closings, or losing their homes, families are breaking up when they have to find places to live, and many are starting to go hungry!
I think it’s time America hunkers down and gets itself back on it’s feet, focusing only on that.
I don’t believe the new world order has any order to it…everything has spun out of control.
it should be a crime, 1.2 mil people out of jobs and our jobs are being shipped overseas that just aint right. so what a huge rich corporation can save a few nickels total corruption if you ask me. on top of that nothing that comes from overseas offers much quality
Outsourcing is a joke. First they tease you that they charge less, but after a long run, these company overseas are charging same fees as the one in the US. Whats the point? you don’t get loyalty from these countries and most of them don’t respect the quality of work and deadlines. Maybe 1 of out 20 is good company. Its true that you save money, but your hurting the whole economy where people looses their job. So who will buy your product or services, if people are getting laid off left and right. What a smart move….
Maybe it’s time to put down the iPod, iPhone, Wii, iTunes and pick up a book. Probably move away from Facebook, YouTube, virtual worlds and get into a real college. Get a real degree that matters. Find a job that creates value or better yet, design a job not expendable to outsourcing. But hey, that’s just me.
This is a form of “tragedy of the commons” that we all learn in Economics 101. There is huge incentive to lower those costs by 70%, but once enough firms have done so, they have eliminated the demand for their product by eliminating the incomes of their customers. It’s a great ride for the first ones to act, but eventually the economy collapses in on itself: it’s much like a pyramid scheme in that respect.
The US once set the world standard to be followed. Now the world is setting the US standard. How does it go? God bless America? Patriotism? Democracy? These these words seem non existant in our society today. Who’s running the country? A proffessional Army, the rich man’s club, tecnology to suppress the masses with sound waves. GOD help America!!!
You need to understand does outsourcing is the reason for this economy ?
Country was good from 2003 -2006 ,outsourcing is also there that time . US companies have went world wide for example DHL ,McDee ,KFC etc etc ,the need a technology projects which should be completed fast within months ,so they started outsourcing the projects .
Slowly outsourcing thaught the Big companies in US ,a big fish -cost cutting – they are okie with quality compromise , ethics to country people as Firing is common (No Karl Max rules here )
Who are benefit by the outsourcing :
yes outsourcing companies (they want to raise the profit in this Stable environment ), outsourced company any outsourced country people .
Who are facing problems :
people of the outsourcing country .
So how to solve this :
Bring balance in everything , people here should take up Techie jobs outsourced and people here should be ready to fight the company which is outsourcing ,Need the proper explanation to the Government if they are outsourcing the job from the hands of the people of their own country ….
Proper outsourcing laws should be written by Federal government ???
My family and close friends absolutely refuse to be patrons of U.S. companies that outsource. Th current economy mirrors the devasting effects sending our jobs overseas. If you can’t run your U.S. business in the U.S., then find another career !!
I think American are short site by farm out work into cheaper places, sure you might have safe a bundle in the short term ,but you are sending your grand kids future away.(tax for school education,R&D of new product….etc)Unless you don’t care of any one else but yourself. Don’t complain when it come to when you need the service for yourself in the USA.Michael
Did you know that your own gov’t outsources jobs? The Gov’t outsources part of the PassPort process to Norway or someplace like that. Their reasoning, costs.
It is a shame, the only people benefiting from these cost savings really are the Executives of companies. It is not like raises have been good the last 10yrs or anything. Pretty soon, we will be in a depression and we all have the Gov’t to thank for it with the NAFTA.
I guess Luu’s taxes will go up. If people don’t have employment they have to get on government assistance to survive. Either we pay for higher labor cost or pay higher taxes.
Offshoring is good. Just look at the state of the U.S economy.
Bottom line: Ross Perot was right.
I couldn’t agree with you more! I don’t understand how businesses can’t see that. People were buying and business were booming because people felt “secure” in their jobs and were making money. Take away the money/jobs and you take away your customers.
I don’t do business with american companies that outsource.
Best move I ever made for my software was outsourcing my inside sales deparment to Inside Expansion.
Outsourcing of manufacturing started with the need to cut manufacturing cost and to increase the profit margins. The same product manufactured overseas would cost cheaper compared to the product manufactured in the US. Which in turn boost consumerism. We are now stuck with outsourcing of services and manufacturing. 2 things. And somewhere we are forgetting that it is us, who buy all the products Made Elsewhere. We should have put an end to it. Even as we debate this topic, I am sure that 100% of what we are wearing right now is all made elsewhere in the world. Basically, our need and agreement not to accept Made in USA label and the companies need to make profit margins has lead to the current scenario. Outsourcing should be done wisely.
Overseas outsourcing can of course cut costs, but there are issues with quality and sometimes that can actually mean more costs.
Also, as Ron Hira says: If American businesses are outsourcing and cutting jobs, where is their customer base going to come from??
This is certainly not welcome news during these times.
As professor Ron Hira said , “Small businesses depend on American consumers. Those consumers are also workers, and can’t buy much if their jobs are being shipped offshore.”
Bottomline outsourcing is a way to make more money and for business owners and management to work less at our expense.
Also the inverse process of H1, H2b visas (60 months) with importing foreign workers as I saw @ IBM in Boulder,CO.
Unless we are willing to commit to succeeding here (Gov. tax credits for jobs, more apprentice vocational training and business assistance programs) this country will lose the middle class and it’s standard of living.
If I get an outsource person answering for an American company I stop doing business with that company. It’s easy
to know outsourcers by the way they speak
There needs to be penalties for outsourcing. The American Middle Class is becoming an extinct breed at an alarmin rate. I don’t blame some small business, they are doing the best they can to survive. But at the same time they are creating their own demise. Without the Middle Class who will end up buying the products? Regulation is needed now to stop this sort of gross abuse by coorporations and the very few who only think of their own growth and wealth. The system will collapse otherwise, which has already begun. But why should millions be victims when all they needed is fair trade and jobs? I know some think that we shouldn’t have government setting the rules for free trade. That logic doesn’t hold up. We are not able to as people prevent doing obviously bad deeds in society without rules. For example, if it wasn’t illegal to drive on the sidewalk we all would be driving on the sidewalk. The governments role is to make and enforce the rules that govern a society including that of responsible trade.
The more America outsources and the more overseas-made crap it forces us to buy, the more disposable we become.
While the offshore outsourcing of our service economy is troubling, it is totally insignificant when compared to the outsourcing of our manufacturing base; the basic building block of a prosperous and sustainable economy.
Unfortunately, those posting here have once again ignorantly misplaced their criticism on “business” and “executives”.
Instead the criticism should be placed squarely on the shoulders of the uneducated masses of American consumers who foolishly continue to demand and purchase cheap products not Made in America and who have no ability to control their need for instant gratification.
For the most part the American consumer is stupid. They do not understand that by demanding and puchasing cheap offshore made products, they create the self-fulfilling prophecy of offshore outsourcing.
If they only had the brains and the financial discipline to purchase Made in America products only and then follow through by NOT spending their dollars if those products are not available, American businesses would fill that need by providing American Made products – made by Americans in American factories.
No, Virginia, there are no jobs to be had in the US anymore – thanks to the American consumer.
If you want to milk the cow, you got to feed the cow! No decent raise since 2001, outsourcing… Now I wonder why we are in the mess we are in? And yes, don’t forget NAFTA. Middle class is getting shafted as usual but who is going to buy that chinese junk? the chinese I don’t think so!
Well not all the outsourcing is good enough. I am on EAD and soon have my green card. I work for the top indian IT consulting company which claims to have a robust and successful outsourcing model. We work on a 80-20 or 70-30 model where 20% or 30% of the people are here in US and rest in India. Typically billing rates for people working in US from our company is $85 per hour while that in India is $21. So indian worker seems to be costing just 1/4 of the person who is working in USA. But quality wise almost all the significant and most critical work is done by US team. They essentially have 12-14 hours kind of work day. They take the calls morning at 7:30 AM and also takes the calls starting from India at 11:30 PM onwards. Very less sleep for these onsite US team folks. And it is this US team which takes the bottomline, respnsibility and accountability of the work. Client grabs their neck for everything. While team in india has got attitude problem. As number of jobs in india are too much, they simply don’t care about the work. They come to the office at 10:00 AM and leaves by 5:00 PM. They have generous 2 hours kind of lunch and tea breaks. They have lot of extra curricular activities, games, sports, gym, yoga classes, training courses at the very good campus with free lunches. Most of these indian team members are looking for excuses for not doing any work. They simply tell these excuses-that their PC is not having enough RAM, program hangs, network cable is missing etc… and so they cannot do the work. As my company wants to increase it’s profit margins in india-they don’t mind kicking out best of breed, talented and experienced folks and rather keep people who are fresh out of college or with less than 1 yr. of experience. And of top of it, in my company-most of these people the moment they get experience of 3 yrs-they don’t want to touch coding or do any technical work. Somebody is lead, somebody is manager, junior or senior manager etc…These non-technical people increases the overhead. As a result there are very few people who are actually working. Better to say in a team of 10 folks, only two are bright and two are above average, rest are there to play plain politics, flatter their bosses and do total time pass. As client is sitting in US-they have no idea what is happening as they do monitoring very minutely. In the end, people who have to suffer are these onsite team members because they cannot afford to be lousy or those 30-40% people in offshore team who are working. When everybody is getting their share of salary why only 30-35% people work in this global outsourced project?
Over the last 12 years this has been the philosophy. Now who is buying anything without livable wage job? We are reaping what we have sowed over the last decade. Whatever happened to making money by building a product vs. cost cutting and reorganizations?
I worked for a company that has outsourced work to India. Result was great savings. But there was a compromise too – Quality and accuracy.
Time management suffered too – the same task was done by 2-3 different individuals due to lack of internal communication. On one hand the compensation was saved but on the other a lot of late payments added up. Outsourcing may work better for big Giants like American Express, British Airways, Citibank etc, who already have their offices in India and can make sure that the standards are met. But for the small businesses in US, it may turn out difficult to do quality check, this may result in losing customers and reputation.
When will they figure it out? If every decent paying job is done overseas you destroy the middle class.Destroy the middle class,destroy your customer base.Destroy your customer base you destroy the economy….oh wait…we are already seeing that. I have an idea! Stop outsourcing to save money and your customer base may actually still exist in 2 years.
Outsourcing is simply all about greed. Every company that outsources says they need to do so to remain competitive and to keep costs down, yet where do those cost savings actually go? Answer: in the executive’s pockets! Companies are sending more and more job overseas, and those executive’s responsible for these “cost-cutting” programs receive larger and larger bonuses. American business thrived for over 100 years after the Industrial Revolution using American workers only. How is it they were able to do that, yet today, company after company says they have to outsource as a means of survival? These claims of survival are complete Bullshit! In the past 20 years, American companies have sent tens of millions of jobs offshore and how much better have those comapnies prospered since before offshoring was created? The only ones that have prospered are the executives that sent the jobs offshore, and the stockholders of the companies that outsource.
If Obama has the strength and guts to win this battle, he cannot simply provide tax breaks for companies that keep jobs here. He needs to enact legislation that makes offshoring so punitive and cost prohibitive that comapanies have no choice but to employ American workers if they want to survive.
American workers have seen their incomes decrease year after year, while executive compensation is at an all time high. All we are doing by outsouring is making Americans poorer and the rest of the world richer. Globalization…ain’t it grand?
Programming is the type of job we need in the United States. The job requires education – something we need to encourage. The programming jobs can be done from home, thereby reducing our dependence on gasoline. I’m sure if you offer programming jobs to people in the United States, at some reduced pay scale, the jobs will be filled. Don’t assume that that you can’t afford United States workers without giving them a chance.
I am in favor of off-shoring non-skilled jobs, because that is not a skill that requires education. We need to think about the country as a whole. Do we want to be a country of salespeople – is that really going to set us on a path to greatness?
Right. In case you haven’t noticed, it is all about taking what you can while you can from whomever you can. Businesses and entreprenuers take it from the customers. The customers try to take it back through taxes.
Globalization leads to a leveling across borders. American workers are out of work because the price of thieir product is too high. Until that levels, or we throw up a wall of protectionism (think back to the mid-70s), this will continue.
We could all move to India or China, or where ever next and work for less in a repressive economy and political system. Isnt that how America got started!!!???
A country that makes nothing and does nothing becomes nothing.
Unrestrained outsourcing will destroy the American way of life. Isn’t it enough that the benefits of much of American manufacturing is now enjoyed by China and Taiwan and that a good proportion of IT development is carried out in India, or that many call centres are not on these shores?
Where do Americans begin to find decent jobs if all businesses start to outsource? Before long, the only jobs available if you are not a CEO, a business owner or their relatives will be flipping burgers and “customer services.”
I love free enterprise, but I view dimly the mind-set that you can sell your country and an eager work-force down the river for the sake of a few percent higher profit.
Ms Luu changed her business model and that’s fair enough, but it’s easy to state the hypothetical and justify her removal of her 5 employees by stating she would be bankrupt now; Or is this just a metaphor to justify not bankruptcy, but that she might have had to tighten her belt like millions of Americans.
It’s time for our politicians to find a practical way to regulate this behaviour so that the country as a whole can benefit from a succesful business. not just a privileged few.
Great for Tessa Luu. Terrible for U.S. workers. This is just the oposite of the two things we need to eventually pull us out of this economic crisis – Sacrifice and Innovation.
Outsourcing is the road to ruin.
No to offshoring, period! It’s a good part of the reason were so messed up economically already; we’re economic crack addicts to Communist China and others. Stupid consumers going into deep debt to buy foreign widgets to make the business middlemen class rich while they send our jobs offshore. An isane, unsustainable, smoke-and-mirrors economic model. No wonder it’s crashing!
Our government has incented businesses to offshore. It is time to reverse the incentive. Tax the salaries of overseas workers and include social security which will go to the worker replaced in the US. Until the financial incentive is removed, you can’t expect CEOs to change their very profitable practices. The B-1 Visa program also needs to be fixed.
The US should charge a stiff import tariff to these companies who wish to enjoy the stability of having their business in the US, but manufacture their goods elsewhere. The tariff should equal the difference between what it costs to manufacture here and elsewhere. If the companies don’t wish to pay, they can incorporate in the third world where they manufacture.
Outsourcing overseas is not only short-term thinking, it’s extremely narrow. As was pointed out at the very end of the article, if US consumers cannot work, they cannot consume. If the business response is to fire more employees, consumption continues to drop. But all the business sees is a lower cost.
Now, companies that outsource customer service are truly killing themselves. From experience, I know that foreign customer service is restricted to a script. Anything not on the script is something they cannot help with. In financial services, what they see on their screen is the same exact thing a customer sees online. All they can do is confirm there is a problem, but they cannot solve it. What happens? The customer asks for a supervisor, gets back to the US 20 minutes later and the problem is solved in another 2 minutes. In these instances, outsourced customer service actually hurts the company — take a look at Dell.
If a company is outsourcing then they should not demand or even expect any assistance from the US Government. Outsourcing is not an answer it is a contributing problem. Many banks and mortgage servicers outsource the financial transactions to places like India. Who is protecting the private financial information of people, when it is held outside the U.S.?
I THINK ITS REALLY BAD. MY COMPANY JUST OUTSOURCED MOST OF THE IT WORK OVERSEAS AND WORKERS WHOSE BEEN IN THE COMPANY FOR 17 YEARS ARE LOSING JOBS AND SO THESE PEOPLE WILL NOW THINK TWICE BEFORE THEY SPEND AND WHATS GOING TO HAPPEN? LOOK AROUND YOU FOLKS. EXACTLY… ECONOMY WILL GO UNDER. WHY BOTHER SPENDING NOW IF I WILL NOT HAVE A JOB TOMORROW. GOVERMENT CAN GIVE ME AS MUCH STIMULUS REBATE CHECK BUT THIS IS JUST A TEMPORARY TO PATCH THE OVERALL FINACIAL ISSUES THAT OUR COUNTRY IS FACING AND NOT A LONG TERM SOLUTION.
TO ALL POLITICIANS OUT THERE. PLEASE HELP US GET OUR JOBS BACK!!!!
THANK YOU.
MARY
I am an owner of a small precision spring company. Out-sourcing has affected our business in a way that we no longer have certain customers as before and must work hard to find new ones. Our business, is very technical and requires skilled workers. We have managed to survive by innovation and R & D to make better, faster and more quality. The solution is not outsourcing but innovation. Economics is basic in the sense if people who manufacture or outsource to save money are the same who want to sell here in North-America. If the economy slips because job losses and dwindling income, people do not have the purchasing power as before. Consequently its a catch 22 situation. Innovation is the key and using current labor and skill to accomplish it. Outsourcing is a lazy way out to make money and socialy irresponsible. It is sucking the wealth out of this country and the damage can be everlasting. I propose hard work, innovation, and determination to re-create wealth and get Americans working. This will stimulate demand and then creat more jobs and so on. The out-sourcing overseas is temporary but the damages to our country and workers as well as the economy as a whole is devestating. This is a situation that is obviously unsustainable in reality.
These claimed savings are a bit mythical, especially for large companies with complex systems.
Yes, they can reduce costs, but usually at a reduction in the amount of work done and sometimes the quality and accuracy of the work that is done.
The choice to outsource jobs overseas is more of a decision made by an accountant; they see numbers and totals, but don’t understand the true value of those numbers.
It is like buying a quart of milk instead of buying a gallon milk. Looks like a savings in your checkbook, but is it really?
In the meantime you have let go people that know your business. A big waste of money is having someone work on something you don’t need; it works but it is useless.
Sadly, if companies learned how to hire and retain truly talented people, they would be able to get the right job done right the first time, and they would need less people to get the work done.
Of course, to do that, you have to stop running your HR from a spreadsheet and realize the paying more for a great employee(skilled, innovative, loyal, dedicated, accurate, fast, etc.) is cheaper than paying less for two(or more) weak employees(just there, apathetic, gets by, slow, inaccurate, uncaring, etc.).
Contrary to what some executive believe, people are not plug and play, especially when you are replacing a known and talented person.
Then again, you probably could replace most CEOs(and similar) with a monkey and a dartboard. :)
Yet again people, it is the same old thing. People always looking at the short term. If all the jobs go overseas. Guess what? There will be noone making enough money here to buy furniture. And as more goes overseas the wages there rise and it becomes less attractive over time.
Only way it works is if you want to sell global and don’t care about the country you are outsourcing from.
But get ready for higher taxes to pay for all the people you are putting out of work who can’t afford to live, pay for health insurance etc.
Outsourcing is a main reason our economy is in the garbage. It is great that the woman in your story saved her company by outsourcing. But what of those 5 people who do not have a job now? Duplicate that over and over and you can see why we have skyrocketing unemployment. All our low level or basic jobs are sent overseas. Call centers, help desk, etc.
The more this occurs the less people will be working and spending in this country. Look at the automakers. Shipped all manufacturing jobs overseas and are still losing money. Sound more like bad management to me.
No more outsourcing.
It’s a great way to cut overhead. But I refuse to support businesses that outsource jobs to foreign companies. Especially small businesses where it is greedy owners like Luu expecting to make a killing from owning a business while refusing to hire workers in this country. Good riddance to Luu and greedy small business owners like her.
I agree with the RIT Asst. Professor Ron Hira that outsourcing, while attractive to businesses, will do no good in the long-term. People are so short-sighted these days, while looking for a fast dollar “quick fix.” Outsourcing is the bean counter’s heroin, if you really look at it closely: Always needing more. Outsource employees overseas and see a higher profit margin. The local tax revenue falls due to less or underemployed local workers. Taxes go up for the businesses to maintain government. That leads to less income and the need to outsource more. See a pattern? This decline is not limited to government. Some cry protectionism, but I prefer the root form “protect.”
I am in the process of researching all of these Business that out source.To make themselves richer at Americans expense No Business fom me.
I worked for an HR firm that outsourced work to India for client companies. I watched American workers at one of the largest healthcare companies have their benefits screwed up, some even lost coverages due to mistakes by the employees in India. Employees had dependents dropped from their coverage, had their retirement questions answered incorrectly, had their medical leaves mismanaged etc. The mistakes made by the Indian employees were breath-taking and the impacts on the American employees were dire if not devastating. I was so disgusted I quit my job. Outsourcing should be illegal period. If you take an Americans job and ship it overseas, you should be severely penalized. If you can’t do business in the United States using Americans then you shouldn’t be doing business here in the first place. I can only hope the new administration curtails this practice dramatically. As far as Ms. Luu, I hope she goes bankrupt soon and readers take note of the name of her company and avoid it like a plague.
The only reason outsourcing is done results from the overpricing of services in this country. Most service firms, from accounting to computer service firms, have an insulting overhead to allow partners to make a million dolars a year. My firm has reengineered the processes and we outsource work for 50% of 2007 billing and give jobs locally in New York and all earn a living.
Being a Software Engineer and having twice trained my foreign replacements, Indian contractors at Sprint and Citigroup I am disgusted at what the Bush administration has allowed to occur. Now the Indians do my job in Cincinnati and I have been unemployed for 6 months. We are entering a depression because of our failed federal government.
Outsourcing is bad for everyone, including the businesses that do it. It does not take a rocket scientist to see that if there is no work, or only reduced pay work available for Americans that the sales or services a company provides will dry up for them, unless they can get the over seas workers to buy them. Since the companies that do this are banking on paying less wages and benefits, very doubtful that the new workforce would have enough income to be able to support the company’s products or services. It is like a drought, there may be pools of water around, but there will also be much more competition for the remaining water. Unless a flood comes to resupply the water, many will perish. Once again the only people that will come out of this better off are the CEO’s and other executives that benefited from the reduced wages their companies paid. Not much of a legacy they are leaving their children and grand children while they screw over the workers for thier own benefits and ultimately fulfill their own prophesy of extinction.
Being the best and number one in a dying market is no reward. A company is only as strong as the employees they foster. There is no such thing as too big to fail any more. This world is smaller than we once thought and the market more susceptible to bad ideas.
Offshoring jobs is not a sustainable business model for the US. I believe one of the underlying fundamental problems with then US economy today is the millions of blue and white collar jobs that have been exported over that past 15 years. I believe our country has reached that tipping point where we allowed to many jobs to leave the country. We now have a situation where displaced workers who were previously earning $50K – $100K are now earning $30K to $50K if they can find work and can’t afford the the goods and services being sold by US companies.
Overseas outsourcing will stay and continue to increase in this slowdown period because of the tremendous cost advantage. Unless the federal govt provides substantial tax breaks to companies to hire doemstically the flight of jobs to India, China, Vietnam and other hot locations will increase rapidly. There is no denying the fact that overseas outsourcing does redue cost but it should be done smartly. A company should start with selective outsourcing then expand as the quality is verified and tested.
America will never be able to complete with labor costs in India. The only solution to save American jobs is to enact fair trade regulations. Every dollar sent overseas must be matched by equal American exports to the country providing goods or services. If the present outsourcing imbalance of trade dollars continues, American’s consumer market and standard of living will cease to exist because workers will have insufficient salaries to buy the goods and services that drive American markets. American dollars are IOU’s of American assets. If trade imbalances continue at the present rate, all Americans assets will become the property of foreign interests. American standard of living will end up the same as India.The travesty of unfair and unregulated free trade is that the American Reveloution started because Americans were sick of working as serfs for foreign powers.
There is at least one situation where outsourcing actually endangers American citizens, and that’s where the product itself is words–yes, words–and these words have to be precisely the correct ones. Medical transcription is the primary example. When doctors’ dictation is outsourced to a country where English is learned as a second language the medical record inevitably ends up full of major errors, believe it. Yet even one slightly-wrong word can endanger a patient’s life. Please note that patients are you and me, folks. Just one example: The doctor dictated hypothyroid but the worker put hyperthyroid–the opposite. Will that patient be given the wrong medication? What do you think? Or if the doctor prescribed Xanax but the worker has trouble hearing tiny differences in English and typed Zantac instead?
Its a race to the bottom. Greed will take
this country back to the third world but
hey, some of you will make money along
the way so who cares right?
Outsource the jobs to make a product cheaper so we can sell it to ….lets see, no one can afford to buy my product because I laid off everyone. I guess I should have thought through to the next step in this descision. Oh well, my bottom line looks good today. All is well. I let my kids worry about tomorrow, as long as I get my entitled share.
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We don’t talk about it much because most of “insourcing” is made for our market. Look at the trade deficit with China, japan, Sout Korea. Japan and SKorea won’t buy American. I have been there many times.