Some industry observers in the US claim misguidedness, short-sightedness or even evil business leaders are behind the latest outsourcing trend but in this issue of Industry Insider, outsourcing expert Michael Corbett says this is simply not true.
Once we acknowledge the problem of a slow, jobless recovery, we must assess its cause and, even more important, its solution.
That companies are offshoring work at a growing rate is certainly true. That offshore outsourcing, which began decades ago in manufacturing, is now expanding to include some of the most highly skilled jobs we have is also true. And that these jobs are gone and will never come back may be true, too.
However, that the causes are misguidedness, short-sightedness or even evil business leaders is not true. And that the solution is to stop the practice is even less true.
We are certainly in a period in which America's trust in its business leaders is at a real low. It's hard to watch images of highly paid executives getting taken away in handcuffs and not feel betrayed. But to extrapolate from that and elevate offshoring to the level of treason is wrong.
Yes, offshoring does involve taking advantage of "cheap foreign labour." But let's be fair. Americans love cheap. Wal-Mart Stores, the largest US company, is famous for its low prices. Customers love Wal-Mart. That Wal-Mart is, all on its own, one of China's top trading partners doesn't slow down the American appetite for what the mega-retailer does or how it does it. Does this make Wal-Mart bad? Of course not. In fact, Wal-Mart just topped Fortune's list of America's most-admired companies.
As consumers, we demand the lowest possible price and the highest possible quality. If an American company can't deliver it -- sorry; we'll buy from whoever can, American or not.
The simple truth is that offshoring is not the result of a few Benedict Arnolds. It's a result of the relentless pressure on businesses to take advantage of every opportunity available to them to reduce costs, increase quality and add to profits.
Stopping offshoring -- or imposing a moratorium, as some have suggested -- would simply put US companies at the mercy of their foreign competitors. Does that mean that every company that is offshoring is considering all of its options and making a fully informed decision? Of course not.
There are real issues that we need to better understand quickly -- very critical ones, such as the protection of intellectual property and private data. And top companies are working very hard to do just that. But again, let's be fair. Intellectual property gets stolen in the United States. And identity theft didn't begin with offshoring. Sadly, it's yet another American innovation.
What to do
So what should we do? Simply tell people to hang on, that macroeconomics will eventually come around to save them? I'd instead suggest a more aggressive, two-pronged effort.
What might that be? We should embrace offshoring where it makes sense, but we should also reinvest some of those savings right here. Let's put money back into retraining and job placement services.
Let's find ways to encourage entrepreneurs to launch new call centers in places like North Dakota and the Bronx to compete head-to-head with those in India, the Philippines and other countries. Let's find ways to help some of our people reapply their talents in fields like education and health care. Let's redouble our investments in research and development in areas like nanotechnology and biogenetics -- fields that offer the United States the opportunity to dominate tomorrow's great industries.
biography
Michael F. Corbett is CEO of Michael F. Corbett & Associates. He has testified as an expert on outsourcing for the White House's Office of Management and Budget.
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