Comments on: Outsourcing roundtable

Digital Agenda Leading figures from the worlds of business, labor and academia give their insights into the issue of offshoring.

Nothing for the American Worker

Diana Farrell (Director, McKinsey Global Institute) says in her article, "Facilitate change--don't stop it" the following "For every dollar of corporate spending the United States outsources to India, our domestic economy captures more than three-fourths of the benefit and gains as much as $1.14 in return." But where does that money go? The money was taken out of the pocket of an American worker and the return goes stockholders.

Nothing for the American Worker

Diana Farrell (Director, McKinsey Global Institute) says in her article, "Facilitate change--don't stop it" the following "For every dollar of corporate spending the United States outsources to India, our domestic economy captures more than three-fourths of the benefit and gains as much as $1.14 in return." But where does that money go? The money was taken out of the pocket of an American worker and the return goes stockholders.

Global economy has it's Up side

McKinsey Report (Feb. 2004) speaks to the metrics of growing the economy, allowing for more dollars growth here than out of this country. We grow stronger and also extend what cost decreasing factors, by doing more business. We must continue to grow, stay positive, and excel.

The economy will be expanding for the future in Nanotechnology, and America will lead this wonderful new generation. (as usual)

Nanotech will save us (any day now).

>>The economy will be expanding for the future in Nanotechnology, and America will lead this wonderful new generation. (as usual)

Really? And what area of nanotech is poised to create thousands, no less hundreds of thousands, of jobs this year?

What are the qualifications for these jobs we keep hearing about? George Bush seems to think a course or two at the local community college is going to prepare people for these jobs. Do you believe that? (FWIW this is not a political stance insofar as Kerry has no viable plan either, although at least he recognizes a problem.)

What leads people to believe that the new industries will be created in or remain for long in the US? Are nanotech companies going to be immune from the temptation to offshore? Are workers in China, India, eastern Europe, etc., incapable of learning nanotech skills?

The "US must innovate and create new industries" assertion is as empty as Carly Fiorina's conscience. Offshoring is nothing more than labor arbitrage and NO KNOWLEDGE JOB is immune. Until the "experts" face up to those facts and stop parroting the nonsense spread by their corporate overlords the US will get nowhere on this issue and the country will become weaker and less competitive by the month.

Global economy has it's Up side

McKinsey Report (Feb. 2004) speaks to the metrics of growing the economy, allowing for more dollars growth here than out of this country. We grow stronger and also extend what cost decreasing factors, by doing more business. We must continue to grow, stay positive, and excel.

The economy will be expanding for the future in Nanotechnology, and America will lead this wonderful new generation. (as usual)

Nanotech will save us (any day now).

>>The economy will be expanding for the future in Nanotechnology, and America will lead this wonderful new generation. (as usual)

Really? And what area of nanotech is poised to create thousands, no less hundreds of thousands, of jobs this year?

What are the qualifications for these jobs we keep hearing about? George Bush seems to think a course or two at the local community college is going to prepare people for these jobs. Do you believe that? (FWIW this is not a political stance insofar as Kerry has no viable plan either, although at least he recognizes a problem.)

What leads people to believe that the new industries will be created in or remain for long in the US? Are nanotech companies going to be immune from the temptation to offshore? Are workers in China, India, eastern Europe, etc., incapable of learning nanotech skills?

The "US must innovate and create new industries" assertion is as empty as Carly Fiorina's conscience. Offshoring is nothing more than labor arbitrage and NO KNOWLEDGE JOB is immune. Until the "experts" face up to those facts and stop parroting the nonsense spread by their corporate overlords the US will get nowhere on this issue and the country will become weaker and less competitive by the month.

Offshore done right should HELP companies compete

What needs to be taken into account here is that US companies are at a disadvantage against other international companies. We should utilize any resource made available to us in order to grow our market share in order to guarantee US companies CAN compete.

If not, those companies will slowly die and ALL their employees will be laid off.

Let us assume I have a budget of 1 million dollars to develop & market a line of CD players for my company. If I spend $500,000 on the software & manufactoring, I only have 500,000 for marketing.

But, if I spend $250,000 for development, I know have $750,000 left for marketing, thus I'll have more sales in INTERNATIONAL MARKETS and bring more foreign currency back to the US. In addition, I can pay better wages to my US employees, build a better brand & develop new applications.

What people are missing is that outsourcing should help companies expand their business into foreign countries and reduce our trade deficit.

If we as a executives of companies don't see this, all we're going to be doing is shifting dollars back and forth inside of the US and eventually lose our strength in the world market. We have to sell more than sugar water, jeans & movies to the world if we want to be a world player.

Mike Dietz
VP of Business Development
Acmet Embedded Technologies
[e-mail]
www.acmet.com
We don't replace technology departments, we support them!

That doesn't add up

"What needs to be taken into account here is that US companies are at a disadvantage against other international companies". How so, exactly? Do we lack educated well-trained workers in this country? Are you not able to sell your products here like everyone else?

"But, if I spend $250,000 for development, I know have $750,000 left for marketing, thus I'll have more sales in INTERNATIONAL MARKETS and bring more foreign currency back to the US. In addition, I can pay better wages to my US employees, build a better brand & develop new applications" You'll have fewer employees to pay, more demand for employment, so sure you'll actually spread the wealth because of the warm fuzzy feeling you get from all the increased profit? No, more likely you will use the high unemployment rate as a means to lower what you are paying your fewer employees and the money you do bring back will go to a few people at he top and stockholders.

And, if bringing money into a market improves a market, isn't that what you are doing to the FOREGN market when you spend money their hiring companies to provide offshore labor?

"What people are missing is that outsourcing should help companies expand their business into foreign countries and reduce our trade deficit." As the article states, outsourced work is a form of trade. Are Indian companies hiring American workers? Sounds like you are increasing the trade deficit by buying offshore labor.

Offshore done right should HELP companies compete

What needs to be taken into account here is that US companies are at a disadvantage against other international companies. We should utilize any resource made available to us in order to grow our market share in order to guarantee US companies CAN compete.

If not, those companies will slowly die and ALL their employees will be laid off.

Let us assume I have a budget of 1 million dollars to develop & market a line of CD players for my company. If I spend $500,000 on the software & manufactoring, I only have 500,000 for marketing.

But, if I spend $250,000 for development, I know have $750,000 left for marketing, thus I'll have more sales in INTERNATIONAL MARKETS and bring more foreign currency back to the US. In addition, I can pay better wages to my US employees, build a better brand & develop new applications.

What people are missing is that outsourcing should help companies expand their business into foreign countries and reduce our trade deficit.

If we as a executives of companies don't see this, all we're going to be doing is shifting dollars back and forth inside of the US and eventually lose our strength in the world market. We have to sell more than sugar water, jeans & movies to the world if we want to be a world player.

Mike Dietz
VP of Business Development
Acmet Embedded Technologies
[e-mail]
www.acmet.com
We don't replace technology departments, we support them!

That doesn't add up

"What needs to be taken into account here is that US companies are at a disadvantage against other international companies". How so, exactly? Do we lack educated well-trained workers in this country? Are you not able to sell your products here like everyone else?

"But, if I spend $250,000 for development, I know have $750,000 left for marketing, thus I'll have more sales in INTERNATIONAL MARKETS and bring more foreign currency back to the US. In addition, I can pay better wages to my US employees, build a better brand & develop new applications" You'll have fewer employees to pay, more demand for employment, so sure you'll actually spread the wealth because of the warm fuzzy feeling you get from all the increased profit? No, more likely you will use the high unemployment rate as a means to lower what you are paying your fewer employees and the money you do bring back will go to a few people at he top and stockholders.

And, if bringing money into a market improves a market, isn't that what you are doing to the FOREGN market when you spend money their hiring companies to provide offshore labor?

"What people are missing is that outsourcing should help companies expand their business into foreign countries and reduce our trade deficit." As the article states, outsourced work is a form of trade. Are Indian companies hiring American workers? Sounds like you are increasing the trade deficit by buying offshore labor.

Unbalanced Roundtable

It is unfortunate that CNET has decided to stack the roundtable with:
- 2 consultants, Aron and Farrell, who profit by selling offshoring services,
- 2 industry reps, Barrett and Mehlman, who are offshoring advocates,
- and only 1 person, Courtney, who has expressed concern about the consequences of this.

4 versus 1 doesn't seem like much of a roundtable.

Unbalanced Roundtable

Hira is wrong in classifying Prof. Aron as a consultant. He/She should read the participant description carefully which states quite clearly that Aron is a professor at The Wharton School.

Dr. Aron is a widely published researcher in this area and his research on services outsourcing are quoted extensively in the academic and practitioner community. Unlike Mr./Ms. Hira Dr. Aron is a faculty member at one the finest business schools in this country and his domain of expertise is Outsourcing which he has researched extensively for years. I have read his papers and his writings for long enough to know that he is the leading researcher/thinker in this area.

Hira may not like what Prof. Aron says, but to call him a consultant who profits from selling outsourcing is calumny and further evidence of protectionist desperation.

Kris Yaksh

Unbalanced Roundtable

It is unfortunate that CNET has decided to stack the roundtable with:
- 2 consultants, Aron and Farrell, who profit by selling offshoring services,
- 2 industry reps, Barrett and Mehlman, who are offshoring advocates,
- and only 1 person, Courtney, who has expressed concern about the consequences of this.

4 versus 1 doesn't seem like much of a roundtable.

Unbalanced Roundtable

Hira is wrong in classifying Prof. Aron as a consultant. He/She should read the participant description carefully which states quite clearly that Aron is a professor at The Wharton School.

Dr. Aron is a widely published researcher in this area and his research on services outsourcing are quoted extensively in the academic and practitioner community. Unlike Mr./Ms. Hira Dr. Aron is a faculty member at one the finest business schools in this country and his domain of expertise is Outsourcing which he has researched extensively for years. I have read his papers and his writings for long enough to know that he is the leading researcher/thinker in this area.

Hira may not like what Prof. Aron says, but to call him a consultant who profits from selling outsourcing is calumny and further evidence of protectionist desperation.

Kris Yaksh

[InetUser]

Short term vs. long term

It's been said in this column that "Protectionism would stifle innovation and job creation in the long term."

Well, since corporate America is founded and focused on the short term 1/4 to 1/4 view, what's wrong with the work force adopting this criteria for their viewpoint? What's good for the goose is good for the gander.

All I can see is that if the workforce adopts this stupid short term view, and force protectionist legislation, it would only hurt for mega rich corporate types.

What's wrong with that? They typically are already earning 400% more then the average worker in the workforce, and the people that would force protectionist legislation, the ones with the voting block, are only asking for a chance to earn a living, not make an obscene amount of money.

[InetUser]

Short term vs. long term

It's been said in this column that "Protectionism would stifle innovation and job creation in the long term."

Well, since corporate America is founded and focused on the short term 1/4 to 1/4 view, what's wrong with the work force adopting this criteria for their viewpoint? What's good for the goose is good for the gander.

All I can see is that if the workforce adopts this stupid short term view, and force protectionist legislation, it would only hurt for mega rich corporate types.

What's wrong with that? They typically are already earning 400% more then the average worker in the workforce, and the people that would force protectionist legislation, the ones with the voting block, are only asking for a chance to earn a living, not make an obscene amount of money.

[tnugen]

Self-serving logic

According to the logic by our genius corporate and government leaders, the more offshoring the better it would be for Americans and our economy. So we'd achieve nirvana if ALL the service and manufacturing are done oversea.
From the perspective of the man in the street, US companies are just shifting their market to other countries when laid-off Americans have no money to spend, thus diminishing the multiplier effect (hopefully our leaders know what this is). They are also giving away the industrial (IT) revolution of the 21st century that is key to economic prosperity - India is prospering while we're stagnating. If the motive is to share our pie with the Indians or Chinese, then this is a splendid policy and is well proven.

Some say our problem is education - this is completely hogwash. The problem is that there's no incentive for education - when a roofer makes more money than an engineer. There's no incentive when kids realize that they have no job after wasting all their time and money in school - just look at the declining enrollment in technology curriculum.

Some say that we'd just have to be retrained or move on to even higher tech jobs. I would like to know what higher tech jobs are out there that would accomodate the thousands of unemployed. Most Americans are not that smarter than anyone else, we just have higher "self-esteem", aka arrogance. Even if we would all want to be nano-tech scientists, 95% of us would be incapable of reinventing ourselves as such. I myself, as a middle aged IT worker, am thinking about retraining to be a mechanic - and it's not because I'm any less educated or less capable than the IT bloke from Mumbai. But I certainly don't have the brain to be a nano-scientist.

Looks like our CEOs are incapable of finding real solutions to their incompetence so they'd just have to jump on the offshoring bandwagon - an easy way out. Just like I've always said - your position in life has nothing to do with your real ability, it's just dumb luck.

[tnugen]

Self-serving logic

According to the logic by our genius corporate and government leaders, the more offshoring the better it would be for Americans and our economy. So we'd achieve nirvana if ALL the service and manufacturing are done oversea.
From the perspective of the man in the street, US companies are just shifting their market to other countries when laid-off Americans have no money to spend, thus diminishing the multiplier effect (hopefully our leaders know what this is). They are also giving away the industrial (IT) revolution of the 21st century that is key to economic prosperity - India is prospering while we're stagnating. If the motive is to share our pie with the Indians or Chinese, then this is a splendid policy and is well proven.

Some say our problem is education - this is completely hogwash. The problem is that there's no incentive for education - when a roofer makes more money than an engineer. There's no incentive when kids realize that they have no job after wasting all their time and money in school - just look at the declining enrollment in technology curriculum.

Some say that we'd just have to be retrained or move on to even higher tech jobs. I would like to know what higher tech jobs are out there that would accomodate the thousands of unemployed. Most Americans are not that smarter than anyone else, we just have higher "self-esteem", aka arrogance. Even if we would all want to be nano-tech scientists, 95% of us would be incapable of reinventing ourselves as such. I myself, as a middle aged IT worker, am thinking about retraining to be a mechanic - and it's not because I'm any less educated or less capable than the IT bloke from Mumbai. But I certainly don't have the brain to be a nano-scientist.

Looks like our CEOs are incapable of finding real solutions to their incompetence so they'd just have to jump on the offshoring bandwagon - an easy way out. Just like I've always said - your position in life has nothing to do with your real ability, it's just dumb luck.

Stock Holders? Maybe.

>>The money was taken out of the pocket of an American worker and the return goes stockholders.

More likely that money will never get to the stockholders but rather be allocated to upper management's multi-million dollar bonuses and stock option plans.

As for those stockholders, Americans in the lower 90% of earning brackets own less than 17% of all corporate stock and that includes 401k, IRA, etc. So the argument that American "investors" are somehow benefiting from offshoring is utter nonsense unless you are in the top 10%.

Stock Holders? Maybe.

>>The money was taken out of the pocket of an American worker and the return goes stockholders.

More likely that money will never get to the stockholders but rather be allocated to upper management's multi-million dollar bonuses and stock option plans.

As for those stockholders, Americans in the lower 90% of earning brackets own less than 17% of all corporate stock and that includes 401k, IRA, etc. So the argument that American "investors" are somehow benefiting from offshoring is utter nonsense unless you are in the top 10%.