Stop people on the street and the answer to that question is obvious. Of course!
Does this happen to you, my outsourcing colleagues? You go somewhere. Start talking to people. They ask what you do. You mention outsourcing. And then you have to don a bomb suit like the munitions squad wears to shield you from the ugly invective that follows. Specifically, they are furious that American companies are using outsourcing service providers who are then offshoring the work.
This is 2011. We’ve been offshoring for a decade. I am still amazed at the misunderstandings out there about the process. This was an issue, what, two presidential elections ago?
I live in Las Vegas, which has one of the highest unemployment rates in the nation. Here is a quote from a letter to the editor in the local newspaper, the Las Vegas Sun, which ran on July 13:
Headline: “Nation’s jobs have gone overseas to the detriment of the U.S.”
Letter: “All I hear is, “Where are the jobs? The answer is that they are overseas…”
On the same day the good, gray New York Times had a front page article entitled “To Make Tiny American Car, G.M. Also Shrinks Plant and Wages.” The story reports how a revamped Michigan plant is building the Sonic, the only subcompact car built on American soil.
The story says the plant now employs 1,800, a reduction of 25 percent. GM says it fine-tuned the plant’s two shifts to work four 10-hour days instead of the usual five-day week to better maintain the machinery and save energy.
Another change: in the body shop, teams of six workers install parts fed to them on automated carts by independent suppliers who operate inside the plant. Normally the suppliers are five miles away in their own offices instead of 50 feet away in the plant. This new business process reduces costly inventory and improves productivity.
Editor’s Note: Ironically, this is how manufacturing outsourcing got started. Henry Ford outsourced work on his assembly line to different suppliers. He had no manufacturing employees.
The jobs that are gone have nothing to do with offshoring. They have to do with energy efficiency, better processes and new ways of working – all good things for American manufacturing. In fact, Harley Shaiken, a labor professor at the University of California at Berkeley, told The Times, “This plant has the potential to redefine American manufacturing.”
My take is that improved technology is killing more American jobs than offshoring. When was the last time you bought an airplane ticket from a human being? You can’t offshore ticket counter jobs. Technology simply made most of them superfluous.
Obviously somebody has to responsible for the sad state of the U.S. economy. Of course President Obama, the hard-core Republicans and Democrats in Congress, big business, Wall Street and the banks have nothing to do with it.
Question: What do you say or do when people blame unemployment on offshoring?
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We’ve been outsourcing a long time before the economic downturn. Companies sending work to outside locations for cost savings has always been part of business strategy. This is nothing new. I currently work with an outsourcing company. I think it has opened the door for more employment opportunities offshore.
I don’t think that offshoring is to blame more than market greed in itself. Offshoring is one small factor of many bigger issues that have caused the unemployment rate to get so out of control.
People close to me have been affected by this. I have asked them if they want to move to China.
I am an IT manager who has been in this business for the past 30 years and have personally seen our company move more than 70% of our IT jobs to India. Not only do we lose those high-paying, white collar jobs from our economy, we also incur productivity losses within our business as the quality of work and speed of delivery is severely impacted. However, companies are willing to do this as it is a quick cure for the “bottom line”.
For those who think that this is not a significant issue in terms of job and revenue loss to the United States, take a look at these numbers from Forrester, one of the most respected I.S. research companies in the business:
“Forrester Research has projected that as many as 3.3 million white-collar jobs of all kinds and over 6 billion in wages will be moved from the United States to lower cost, offshore locations by 2015. Although the initial emphasis has been on routine service and technical support positions, the trend is expanding to include more complex engineering and design services. It is abundantly clear that many of the jobs being sent offshore were formerly held by U.S. engineers, computer scientists and other information technology professionals”.
Finally, we not only lose these jobs in the short term and cause significant personal suffering from those losing their jobs (and I have many friends that fall into this category), we are also sacrificing our nation’s health and the opportunities for our young people.
By the way, how many of you are encouraging your high school son or daughter to go to college and spend 4 hard years learning to become a computer programmer??? That’s what I thought!
State Street Corporation has just begun their IT transformation which included the outsourcing of the entire IT department to IBM with a loss of 850 jobs. IBM’s facilities are located in Eurpoe, Poland etc…How is this good for America? Soon BNY Mellon will follow suit and so will Case and the rest.
Andy Grove, former CEO of Intel, said the U.S. used to have 2.5 million jobs manufacturing computers. Now it has a tenth of that. Where did the jobs go? Automation? No, they still exist, they’ve just been offshored.
Two million here, a million there, and it starts to add up.