Offshore Storm

Over at wsj.com, the question of the day asks whether the government should give employers incentives to keep jobs in the U.S. 55% say no. And there 27 comments, at last count, including mine, which is: Although I'm a life-long advocate of free world trade, I'm worried about the number of call center, software programming and related jobs that are being outsourced abroad. But giving financial incentives to employers to keep jobs in the U.S. would be a world scale blunder regardless of how politically appealling it might be to ambitious politicians. What appeals to me probably also would offend the rest of the world and violate WTO rules---penalize such outsourcing through high tariffs or taxes. Another alternative is to tax the use of domestic satellite dishes used by outsourcing employers. Or, how about requiring large, bold labeling on all products supported by outsourced call centers and developed by outsourced software programmers and engineers, etc.? Require all advertising and product displays, catalogs to boldly state on the cover: Products and services offered by IBM were created by 20,000 foreign workers. On the other hand, outsourcing could be a major boon to U.S. security and diplomacy. Defense companies and NASA, for example, make sure they have suppliers in every Congressional district so that their programs will have strong Congressional support. Similarly, as the number of American companies that employ workers in India, China, Pakistan and other countries grows, they might look more favorably toward the U.S. But, Ford, Cat, GM, IBM and many other companies have huge operations in France, and it's an enemy of America. So this plus looks pretty meager, doesn't it? Historically, price means more to American and the rest of the world's consumers than nationalism, so it's going to be tough to stop outsourcing. But I'm sure the displaced white collar workers will make sure the executives responsible for such outsourcing become well known and, possibly, ashamed to show their faces to their fellow citizens. We're not talking about textile workers, here. Antiglobalization could become real big, again, which would be a shame. Democrats may ride this issue to power in 2006 or 2008, if not sooner.

Globolisation is surely taking its course.While the outsourcing of jobs is creating divisions here in the US it also pays to reflect on the reactions of the poor nations and their concerns about globolisation.Although violent protests against world trade organisation meetings have been proof of the growing opposition to globolisation- the Asian nations have more to gain in the long term.The underdeveloped nations however do also realise that they have more to loose if the transition is fast paced . Politics may surely sway the current trends in outsourcing ,but for the business community ,it is surely the wisest decision to buy the cheapest and equaly eficient service i the interest of increasing returns on an investment. Careers in relative fields of the wite collar jobs that are being outsourced would end up being unattractive here in the US .We would see a dicrease in professional knowledege in these industries .This however may raise some security concerns .Especially when a corporation has to entrust its systems,client information,etc to foreing management .For now time would tell should prove whether these decisons were well thought.

You get what you pay for... and corporations deserves the best.

Well, Globalization is a bridge (not one-way). There was a lot of protest in India (even now), when India started globalising in early 90s. When Coke came back to India, that was the end of local softdrink brands. That goes with other brands also. Jobs were cut, companies were shut down. But I did not see anybody from America complaining... Because it was beneficial to them. Now the skilled poeple of India/China etc. are taking up jobs of well-paid Americans.. please do not complain. We are talking about Globalization and please do not mistake it for Americanization. America will no longer be able to make money out of the rest of the world without sharing its resources with the rest of the world. That era is over.. Please wake up to reality now. As another person commented, American companies do business to make money and not for charity. So, they will move to places where it is cheaper and better. And please remember that their politicians are also controlled by (or owners of) business houses. Time to take a re-look at the 'American way of Life'.

If the jobs are retained in US, US corp's pay higher and in the end the people pay higher for the goods and services. This makes prices to go up, or services to decline - and both are losers to the US corp's. If jobs go out, the prices are low, but there are less people who have money to buy. Still the corp. looses. Flight of money, technology, information is far easier today then in any time in history. Change is a fact and the new dimensions of business, or way of business or process of business is also going under change. The corp's are also changing, and trying to adapt with the new environments. What to do ??? Roman Empire fell and now is restricted to Vatican City, and who knew that a London lawyer, thrown out of a first class compartment of a train in South Africa - will change the power game of England in just 50 years. US cannot complain, when it still attracts the best talents from India, China etc. US cannot complain, when they want cheaper goods, better services, and better pay - and still retain jobs. Idi Amin of Uganda fame - tried to throw out a set of people - and the history is known. Only thing US can do is to adapt and see how to retain it's flight of capital, and still keep the citizens happy and prosperous. There are no pills, no bang bang, no quick fixes - but innovation. Innovation of business processes, business models and may be - even business.

Outsourcing jobs abroad is big and growing, but Americans are taking note and the question becomes, will the market or government change the trend? How can the market respond? Americans will take jobs for less pay and benefits, which will discourage some outsourcing. Customers might rebel against talking to CSRs with foreign accents, which are pretty easy to detect. American businesses will wake up an realize they are exporting intangible knowledge that will create competitors and create huge business risks. The big drop in the value of the dollar could change the economic equations. Congress could come up with creative taxes and other penalties and could turn strongly protectionist, creating problems not onlyl for out sourcing companies but also importers such as Wal-Mart. You can laugh at these possibilities, but one thing is certain, all of today's trends and forecasts are causing people to search for ways to reverse the trends and make the forecasts wrong. That's how politics and markets work.

When those white-collar workers start collecting unemployment, paying lower taxes and spending less money, the government is sure to notice. Corporations may benefit, but will America? I think it's up to the government to assess the long-term risks and react accordingly. Corporations are just doing their job: finding new ways to improve operational margins.

See page 1 of todays WSJ: "Migrationof skilled jobs abroad unsettles global-economy fans." At the Davos World Economic Forum, "They question whether the increasingly global economy will proudce as many high-wage jobs in rich countries as once was expected." And it's feared politicians will become more protectionist, just as we were discussing next week. Must reading for anyone interested in the topic.