What don't you get about "outsourcing" jobs to other countries?

Question

A company makes a software package that sells for $5,000 to large companies. They hire engineers (software programmers) here in the San Jose area that cost upwards of $60k a year to employ. And they continue to update the software. Now a firm in India comes along and offers them 5 equally competent software engineers for $60,000 a year; and these guys/gals work 6 day - 10 hour days - schedule. If the company doesn't take the India firms offers they will be hired by a firm in Germany. A competitive firm to the San Jose company that will put out a similar software package for $995.

So if they cut the San Jose jobs they are damned by those saying they are outsourcing. If they don't cut the San Jose jobs they go out of business thanks to the German competitor. What exactly are they suppose to do?

By the way; by accepting the Indian offer they lose 3 software engineers, but keep 11 others employed; sales, support, etc.

Answer 1

I think it's difficult for a lot of people to understand or support losing local jobs. However, your scenario is accurate. This is now a _global_ economy and people need to shift their thinking a little bit in order to understand the financial impact of decisions to outsource or not.

The primary points of your argument are,
1) There are equally competent engineers in India.
This is true, in fact, of the people that I have worked with, I find that people in Indian firms are _highly_ competent, hard-working, and well-mannered.

2) These competent engineers cost less.
Absolutely true. This will probably change over time as the law of supply-and-demand starts to work, but not for awhile. Although there is a great deal of demand for low-cose, high-potential engineers, there is also plenty of supply in the global markets.

3) Companies that choose not to utilize global resources will lose.
Very true. The cost of product at such a company will be higher in some way. The product will cost more to make, support, fix, enhance, etc.

4) Downsizing has offsets.
Also true. There will always be a need for direct customer interaction in many areas. It's only the areas that can be serviced by remote people, like software development, testing, call centers, monitoring, etc that will be heavily impacted by global outsourcing.

Answer 2

The trend of outsourcing is becoming clear to me. It is legal slavery (if my words are not to strong). Now I don't know much about software companies but the way I see it is that outsourcing is an unbalanced trade. Let me explain. Some companies are willing to trade "3 software engineers (educated people that I am sure are very competent and do very well at there job)" for cheaper laborers that do pretty much the same job yet they get paid less. It seems like they would deserve as much of a pay that the 3 software engineers would get. A skill is a skill regardless were you are from. If these new laborers would move to USA, they would get the salary the 3 software engineers had prior. Outsourcing is a matter of living cost. It is clear that the American cost of living is way above our means hence the American public is creating this trend of outsourcing. If we weren't so freaking greedy and materialistic we would demand as high as salary and we would keep our freaking jobs!!!!1 Sorry, got carried away. Thinks for this exchange of thoughts....:-)

Answer 3

Why you believe that corperations will share there profits with the rest of the country is ignorant. GM had record breaking profits back in the 80's and the closed factories in Detriot. Instead of putting the profits back in the factories or the workers pockets, they gave their money to the share holders. Do you not understand economics? A BUSINESS IS IN BUSINESS TO MAKE MONEY. Plan and simply there is your first lesson. Well in capitalism you have to take on share holders in order to expand your business to MAKE MORE MONEY. Well these shareholders buy and sell stock everyday people get filthy rich by just owning a piece of a company. The only way you get people to buy your stock is buy cutting expenses and raising profits. More people buy your stock the MORE MONEY THEY MAKE. Where does that leave the American worker? Out on their *** thats where. Outsourcing is harmful to our economy and to the people that support it. They leave our workers with out healthcare, which drive up the cost for everyone else. They put more people on welfare and bleed the social systems dry. These systems like social security were built in the 30's when we had no outsourcing. The people in India are not getting healthcare or regulations protecting them. I hope your happy driving your China made car that was built by children who die to make that stuff for you and me. We are getting fatter as a nations because of corperate BS. We killing our resouces so the fat cats at the top can eat steak everyday for the rest of the pointless lives. We cant make any changes in how we are hurting the environment because that will bring down profits and kill companies. CEO's dont give a shti about you or me. They are out to make a buck and will step on anything or anyone who tries to stop them. Notice all the cheap crap you buy from walmart? Why can a high school in Gallup New Mexico make biofuels, but companies cant switch from oil to more efficent fuels. Its either going to be us or them. I am watching out for me

Answer 4

You have a fundamental understanding of the economics driving globalization and how exporting jobs can save American and European companies money. So what do you suggest be done? I think its interesting to note that even though millions of jobs are exported for cheap labor, the US economy keeps growing and is replacing those jobs (better paying ones) at a rate faster than they are leaving. Not only is the US economy able to make gains for US workers but it is also supporting a healthy percentage of Mexico's job growth.

Answer 5

Eventually it will all come back to the US once we become a low cost region.

We send good manufacturing jobs to Mexico and then millions of Mexicans come here looking for work...???

What am I missing here??? Looks like Mexico is making out pretty well in this whole deal.

And you gotta love interstate trucking between our two nations. US freightlines have to stop in Brownsville, TX and unload for Mexican carriers to take the freight into the interior of Mexico, because crime is so bad that US trucklines can't haul the freight. Meanwhile, our government is considering loosening the safety requirements for Mexican Trucklines to come into this country.

Do you want Mexican truckers running American interstates??

I don't...

Answer 6

My problem with this is the fact that it is permissible for them to extort under developed countries with labor and sweat shops...this to me is totally reprehensible! I think that if it is an American corporation it should have to pay American wages. and vise versa...or have a universal minimum wage requirements for companies operating outside their base... not to mention the export / import agreements need to be quite a bit more balanced! Also, if Americans don't have the imcome to support all our bad habits...how are we going to buy the products they are selling! Whaaaa!

Answer 7

I have often wondered why Bush does not address this... His recent trip to India was an indicator that he supports outsourcing American jobs for greater corporate profit!

Answer 8

i have a question. are you racist, zionist or something creepy like that.