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DIGITAL AGENDA: Offshoring
The reality behind the politics
Out of all the vitriol surrounding the offshore-labor question, remarkably few concrete suggestions have emerged to address this controversial trend.
In stripping away the hype, this CNET News.com special series examines the social, economic and political dimensions of offshoring and offers tangible steps that can be taken for the U.S. industry to maintain its historical lead in high technology. The report includes a poll of nearly 500 key industry decision makers, conducted jointly with Harris Interactive, the research firm that created The Harris Poll.
Day 1: U.S. needs reforms, not rhetoric
Government officials, business leaders and academics agree that the future of America's technology complex depends on education, professional training and research investment.
Day 2: Companies guarding 'secret sauce'
Although many U.S. technology businesses are contracting or considering some form of foreign outsourcing, they are adamant about keeping intellectual property at home--for now.
Day 3: How India is handling backlash
In stark contrast to the heated reaction among many U.S. workers, the country that is most associated with offshoring is both subdued and puzzled by the opposition that has arisen.
Day 4: The next technology battlefields
Rather than trying to reverse the outsourcing wave, the best way for America to fend off foreign competition is to invent technologies that will drive a new industrial cycle.
Taking the presidential campaign offshore
President George W. Bush and Democratic challenger John Kerry have yet to take definitive stands on the controversial topic of offshore outsourcing, but both candidates have made various proposals to strengthen America's global position in high technology.
President Bush
- Opposes limits on international trade in general, as reflected in his top economic adviser's defense of offshoring.
- Supports a permanent R&D tax credit for businesses and seeks record federal R&D spending of $132 billion for next year.
- Proposes a budget of $14.6 billion next year for training programs and grants for technical and two-year postsecondary schools, a 6.7 percent increase from this year's budget.
- Touts the No Child Left Behind Act, which calls for more accountability in schools, as a key to lifting student performance.
Sen. Kerry
- Calls for federal contract work to be performed by American workers "wherever possible."
- Agrees that the R&D tax credit should be made permanent and proposes a tax reform plan designed to encourage companies to create jobs in America and stop shifting them overseas.
- Advocates increased spending for "key research programs and agencies," such as the National Science Foundation and National Aeronautics and Space Administration.
- Seeks expanded education funding--partly through a "State Tax Relief and Education Fund" that would allocate $25 billion over two years--and proposes a tax credit on the first $4,000 of tuition for each year of college.
Design: Marla Price Production: Andrew Lottmann
Those corporations doing offshoring are living off the perception that somehow things are cheaper in India.
Globalization is a name for the circumvention of the labor laws of developed countries and the denial of basic rights in developing ones.
Check the prices of some items in India:
www.fabmall.com
www.motozone.yahoo.co.in
www.lgezbuy.com <a class="jive-link-external" href="http://www.cushwakeasia.com/publication/pdf/india/ND%20Q103.pdf" target="_newWindow">http://www.cushwakeasia.com/publication/pdf/india/ND%20Q103.pdf</a>
More on India's patent laws: <a class="jive-link-external" href="http://www.wired.com/news/conflict/0,2100,48153,00.html" target="_newWindow">http://www.wired.com/news/conflict/0,2100,48153,00.html</a>
<a class="jive-link-external" href="http://www.wired.com/news/medtech/0,1286,47643,00.html" target="_newWindow">http://www.wired.com/news/medtech/0,1286,47643,00.html</a>
Personally, if I were going to school I would pick a field that I knew could not be outsourced. Say, medicine (not radiology, though!). And I would tell my kids NOT to go into tech work.
BTW, the CEOs say there are not enough tech workers in the US, and that's a reason they offshore. That's a blantant lie. If that were the case, why are there so many qualified programmers out of work? I personally know more than a few excellent programmers who have been laid off. The real reason is cost.
And people don't consider the spiral:
1) many jobs get offshored. Not just tech, radiology, CPA work, legal work, anything that does not need face-to-face interaction can be offshored. We're already seeing it with all of the above examples I gave.
2)Yes, we get cheap stuff, but who can buy it, if all the good-paying jobs go overseas? Certainly people in India and China are not going to buy $5000 HDTVs.
3) All these people out of work = lower tax revenue (this has already been seen; CA is very worried about this) for both income tax, SS tax, and sales tax.
4) All these people out of work will need unemployment and perhaps public funds for medical care at county hospitals etc. But there's less tax revenue to provide these services.
5) Less SS tax means SS will run out of money sooner.
6) Less people can buy stuff. This means there will be less product demand. This will hurt corps (in the long run).
There's more and more. You don't need to be an economist to see this. Just have common sense. Watch Lou Dobbs on CNN for more of this info, if you want more.
Basically what corps are doing is getting a short-term gain (lower wages) for a long-term cost.
Note: when it comes to less $$$ for the corps, they are against offshoring. Case in point: offshoring of drugs (meaning, importation of drugs from Canada). I'm sorry, I trust Canadian drugs. You can't tell me they sell their people stuff that will hurt them, or us.
I'm disappointed that CNET is taking a pro-offshoring stance.
This amount, which I would peg at about a little less than a quarter of what an American web designer would be paid, is not an exploitative wage. We're not talking about slave-labor sweatshops, but slick design studios in corporate centers. We're not talking about subsistence-level salaries, but smartphone-toting young professionals, confident in their careers.
The reality is that not everyone needs to realize the decadent American lifestyle to be able to practice their trade -- whether it's software development, customer support, graphic design, or anything else that can be outsourced. Knowledge workers in the Third World can be happy with much less than that.
It's this market reality that's got the "great" American worker quaking in their boots. It's got American industry, once the big preacher of open trade and global competitiveness, lobbying for preferential, protectionist compromises.
Americans have long preached to developing nations that free and open trade makes the world a better place. How sad would it be if American policy stabbed developing nations in the back by witholding from us access to the largest services market in the world?
Years ago, America told the Third World to get competitive, and so we learned and became competitive. Now that the enlightened masses are starting to awaken, employed America cries foul?
The consumer is the only thing that can make a company change its actions (other than new laws). Any other solution cannot and will not work.
All of this screaming for legislation is because Americans (not all) would rather someone else did the work and then just hand them the pay. A labor force from a generation ago still new what it meant to work hard for the right to be called the greatest industrial strenght ever. Every whiner and crier on this web sight wants something for nothing. They have lots of words at there disposal, but not a one is willing to get up and do what it takes to solve the problem. The ones who are doing something don't need to whine and cry.
find an Indian programmer with an MBA who's willing to work
for 5k US per year? Education is NOT the answer.
2. Company's are outsourcing to save a few bucks all have CEO's
making millions, which is absurd. They could afford US
programmers if they cut their own salaries in half.
3. US Taxpayer dollars should NEVER go to foreign company's
period. It's immoral to use US tax dollars against the same
citizens who supplied the money in the first place.
4. The solution is simple, stop supporting companies that
outsource. They have every right to outsource your job, you have
every right to boycott their products.
5. If Indian company's were that good, why aren't there any
Indian Operating Systems, Databases, Office Products, etc. for
sell in Best Buy? Surely Wipro or Infosys could make a few decent
apps. The reality, most of the good Indian developers are
already in the US. Productivity levels in India are not that great.
6. In the end, there's nothing to worry about in the long run,
because the companies that have outsourced will eventually
come crying back.
An Indian programmer with an MBA who is willing to work for $5k US per year is exposing the historical artificial nature of barriers to free trade, and providing motivation for the terminally lazy to get off of their post WWII world assumptions about an endless entitlement to drifting along at quarter speed.
The best, anywhere, are increasingly able to offer their best. The best, everywhere, show that they are the best, by responding with new thought, new creativity, new ideas.
I've noticed a hard to ignore trend; it's the terminally deadwood that are complaining about the new reality, which is increasingly, a reality based on merit, not happenstance. It's the best that are embracing it, are excited about the possibilities, and are not threatened by the fact that gradients drive everything, but instead, revel in that fact.
At the same time, there is a flip side to this; some have taken this an an opportunity to glom onto 'the cheapest', not necessarily 'the best'.
Efficiency/ROI is based on return for a given cost, not just 'lowest cost.' Folks who have never understood development, but understand 'cost' are making all kinds of wishful decisions these days. At some point, no matter how low cost, a given return requires a given realization of a result. Plenty of folks have gotten burned already pursuing a succession of radically 'low cost' solutions which have achieved ... nothing. OTOH, some results are perfectly suited to low cost solutions, and not only can be done that way, but should be done that way, freeing up resources for other tasks.
But, that's just the reality of change. In the end, the best value will prevail--no matter where that value is.
There is a great future--for a meritocracy. How one responds to that fact says more about oneself than any worldwide conspiracy.