Outsourcing, has attracted much attention since it became a hot topic during the last presidential election in the USA. Companies in the USA and Europe are now sending jobs off to India or China or some other country where they can be done at a lower cost, increasing the profit margin and productivity. Productivity increases are made possible by the 24-hour work day; when the office in the US is ready to close, its Indian counterpart is ready to begin, thus creating a continuous work cycle. Despite the advantages of outsourcing for companies, the practice has attracted much criticism from the US public and some politicians.
Companies have laid off workers in the US and hired people in India or China to do the same kind of work for less, for example, call centers in India. Many American companies have outsourced their customer service department to India. So when you call for service, the call is picked up in India. In addition to concerns about many Americans losing jobs, people have complained about the quality of service provided. The complaints arise mainly because of the difficulty in understanding their accent or due to the cultural differences. Nevertheless, a person who believes that he has received bad service will have a negative opinion on outsourcing.
Another reason for the increasing opposition to outsourcing is the concern that in the long term, the American economy will suffer since not only the low-paying jobs but the high-tech ones are moving away from America. They are concerned that in the future, America will lose its edge as the technical leader.
Concerned citizens have now formed lobby groups to pressure the government to pass laws that would ban outsourcing. In states like New Jersey and Washington, there is an on-going concentrated effort to ban outsourcing.
But are the companies listening? Economists and industry analysts say that because of outsourcing companies are saving costs and increasing profit, which is good for the economy as they will pay higher taxes. For the job losses, they say that outsourcing of low-skilled and low-paying jobs means more high-paying jobs for Americans. Even the companies who outsource have defended their position siding with the economists. They say that the market competition forces them to control costs so any low cost opportunity needs to be utilized.
The role of media in fueling people’s anxiety over outsourcing and probable job drought is not hidden. Lou Dobbs, who has a book on outsourcing, has devoted most of his website to talk about outsourcing and how it is killing the American middle class. Then there are numerous radio talk shows and newspaper reports on outsourcing stealing jobs away from Americans.
It is important that we look at this issue with regards to both sides of the argument. It is true that Americans are losing jobs, but the expenses the company is saving by outsourcing can be invested in the laid off worker’s training so that they gain new skills and can be employed again in a high-skilled job within or outside the company. Jobs in health care, law enforcement, journalism, and construction have the least chances of being outsourced. We can train laid off people in these fields which have higher earning potential. Even the economy will benefit in the long run as a result of cost savings, increased profits and rise of high paying and high skilled jobs.
President Bush in his recent India tour said that outsourcing is painful but necessary. In the coming days, American ingenuity will be able to get the best out of outsourcing.
Previously published at Suite101.com, March 6,2006.