In Focus: Outsaucing
From Fortune.com:The reason we have a so-called "jobless recovery" has little to do with offshoring. The number of jobs offshored to India so far remains minuscule—in the low hundreds of thousands at most. What’s causing much more pain is that employers are reluctant to hire. As several have pointed out, we don’t have a firing crisis, but a hiring one. And the reason companies can get away with not hiring is that they’re getting extraordinary productivity gains from their existing employees. Why? All the technology that has been installed over the last decade or so is finally starting to pay off.
Matt's Chat
This is what has bothered me most about this argument. In some respects, we are still recovering from 9/11. I haven't experienced a whole lot of firings going on, but I have seen a lot of reluctance to hire new folks. The reason for that is that the American worker has been very productive (and that doesn't mean I advocate Americans getting lazy all of a sudden) so the workload has increased for everybody so that it all gets done. Here is a sample of the kind of criticism that the author of that article has received that illustrates some of the passions that outsourcing is causing:"You talk about how jobs going to India frees up Americans to do other things, Yeah, waiting in the unemployment line. You say that sending x-rays overseas for analysis is good because that will free up money for medical innovation… I'm wondering if you actually believe the hospitals will drop prices on hospital visits...Dell has sent jobs to India, but if they want to be fair they should sell their computers for what they would go for in India. But I still haven't seen a Dell computer for about 150 dollars…When will I get to see the savings? This goes to show that you are a sell-out for writing this story."And there is a good point to be taken from this: American companies are going to have to start passing the savings on to the consumer.
Pro-business folks will say that they are; imagine what that computer would cost if it were made here! Which is why I'm not a union guy at all. But I will admit that I have a hard time believing that we are getting goods at prices that reflect a modest markup over production cost. Seems to me that companies are focused on the bottom line...and that's not a bad thing either (business have to make money to pay their employees). Throw in the fact that market forces drive prices too...and so long as you are willing to pay a thousand dollars for that Dell; dude, you're gonna pay it.
