Outsourcing Cannot Be Wished Away and Its A Folly To Attack It

Aug. 27, 2012 - PRLog -- Much of the vitriolic that has been heaped on outsourcing - and outsourcing to India in particular - by anti-outsourcing campaigners in the US, has its roots in a somewhat loose and shaky soil. Not only is the continued attack a clear indication of political and economic myopia on the part of the opinion makers in the US, but the latter are also guilty of severely misleading the hapless American public who only believe what they are compelled to believe.

A recent article in The New York Times (August 7, 2012) has underlined the long-lasting damage that vote-grabbing politicians can inflict on the US economy if they continue with their tirade against outsourcing and globalization.

Outsourcing had to be an inevitable offshoot of the rising trend of globalization in which companies and businesses realized the immense benefits that accrued from working with cheap but talented labor and thereby see a visible difference in cost and overheads. Did that mean that some jobs that were not regarded as core competencies had to be shipped overseas?

Yes, it did. But, in the distress of a temporary job loss what has conveniently been overlooked is that it was outsourcing that helped hundreds of American companies stay afloat, and the profits that these companies released back into the US economy actually helped stabilize the wobbling job market and create more employment opportunities.

The calculation is simple. If a small or medium sized enterprise does not take advantage of outsourcing, it stands a good chance of failing to keep up with the competition, be forced to hand out pink slips and lag behind on its own growth chart. But if this same company were to outsource some of its non-core strengths, thereby leaving its resources and manpower free to concentrate on its core competencies and so make profits, it not only creates opportunities for expansion but also insulates itself against the vagaries of international economics.

It is only political short-sightedness that goads US politicians to make a big case out of outsourcing and how it is the sole reason behind job losses across the US. When they make over-enthusiastic promises to credible voters about rolling back the favors from all the companies who continue to ship jobs overseas, they are making a classic case of 'chopping the nose to spite the face'. How can these leaders fail to anticipate the backlash that would inevitably follow if they clamped severe restrictions on outsourcing, raised barriers on importing or withdrew tax benefits from companies who outsourced?

As the article rightly states : 'outsourcing is pretty much irreversible'.

It is natural business sense to create a network of contacts and resources  where they are abundant, cheap and yet excellent. And if that means crossing the shores of one's own country to harness these resources then so be it.

Education standards have also dipped in the US, further intensifying the threat of job loss to more qualified and cheap labor from the developing nations or having to part with even low-skilled jobs to competition from abroad.

Recent research has already shown the writing on the wall. High growth rates have been forecast for the developing nations. And if the US does not desist from flexing its muscles by creating barriers and bans on imports and outsourcing, it will  invite a swift retaliation from these countries – something it can ill-afford to if it wishes to retain its tag as a super power. In today's shrinking global marketplace, survival without co-dependence can sound the death-knell for any country, even a developed nation like the US.

The rules of the game have changed over the last two decades. The big multinationals as well as the scores of SMEs alike feel absolutely justified in putting their money where the return is the maximum. Whether it is to escape the tax net, lengthy regulations or hire an affordable workforce, outsourcing is being integrated into the business strategies of most companies.

Half the fear of outsourcing for the average American worker stems from the instant reduction in benefits they face if their job is moved overseas. It is not just the salary that goes, it is also the other benefits like health insurance  and unemployment benefits that get hit hard. Perhaps if the US government addressed these issues instead of laying all the blame at the door of outsourcing, it might actually not have to deal with the outsourcing issue at all.  

Outsourcing is merely the face of a deeper malaise that is plaguing the US economy today. And the movers and shakers out there would benefit if they addressed issues of trade, taxes and social reforms – all of which directly impact the common man.
by, http://www.virtualemployee.com/