Making sense of outsourcing and offshoring

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Do you want to compete?

"Hence the modern company maxim--do what you do best and outsource the rest. And if this works for individual companies then, the logic says, it should apply at a country level too. "

Not at a country level, if you're a *company* and you have unproductive assets caused by the outsourcing, then you can sell them.

If you're a *country*, your unproductive assets are unemployed people, and you can't sell them. You pay for them, that creates a tax burden which makes the rest of your businesses less viable.

So it makes sense as a country to try to compete in the world and get as many jobs as you can. Particular if the job is a 'design' one that leads to future products.

In this case there isn't a shortage of IT workers, there's an oversupply following the crash. I know I have many US & European friends who are unemployed, and I had to *make* work for myself when it struck me.

So it makes sense for countries to try to retain as many of these higher paid jobs as possible.

If you only had a limited supply of people, then it makes sense to outsource the low value work and push your own people into the higher value work to maximize your earnings. But when you have heavy unemployment that strategy falls apart.


Of course you have obligations too, in order to be allowed to export to countries, you have to allow imports. That's *allow* not *encourage*, imports are a duty, your part of the trade bargain, not a reward.

Tell me, do you want to compete in the world, or do you want to run away every time a competitor comes along?

These offshore IT countries have inexperienced staff, a time difference, a communications barrier. So it makes sense for US & Europe to *discourage* offshore outsourcing that ultimately ships the knowledge offshore, *discourage* not *stop*, because if they block it, it breaks their duties under free trade.

Posted by: Nigel Johnstone   Posted on: 03/25/04 You are currently: a Guest | Members login | Terms of Use

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