The NYT Gets It Right on Outsourcing

Thom Lambert —  1 March 2006

On several occasions, I have posted entries criticizing editorials from the New York Times. To be fair, I suppose I should praise the Times when it gets things right — as it does with today’s editorial on the outsourcing of computing work. My only quibble is that the editorial fails to mention the fact that this supposedly terrible outsourcing benefits consumers by lowering prices. Kudos to the Times, though, for going after the doomsayers.

Thom Lambert

Posts

I am a law professor at the University of Missouri Law School. I teach antitrust law, business organizations, and contracts. My scholarship focuses on regulatory theory, with a particular emphasis on antitrust.

11 responses to The NYT Gets It Right on Outsourcing

  1. 

    It never ceases to amaze me how people who in other contexts would mouth platitudes about “diversity” and “multiculturalism” turn into raving nativists on the subject of outsourcing. Perhaps one of them could tell me, what is it about workers in other countries that they don’t deserve “our” jobs? Would you prefer that we refuse to trade with them (outsourcing being a form of trade), then send them monetary “aid” that lines the pockets of repressive (but “friendly”) dictators?

  2. 

    I guess the left has a voice after all – as evidenced by all the responses to this blog topic…

    The intent and motive behind corporate outsourcing is simple – cheaper labor for similar skills. Quality of service is NOT the motive. Quality of product is NOT the motive. Deficiencies in these areas are to be tolerated – during the ‘startup time’ – by the consumer, and are expected to resolve themselves, over time.

    The simple intent is to shift wealth away from the workforce in America to the share investors and executives in America. The foreign labor is simply a tool to do this.

    Workers in Bangalore will be tolerated by this movement as long as they are cheaper than workers in, say China, or Burma, or Africa, etc. When the workforce in some other area of the world is cheaper, the technology will move there.

    It is a simple economic model. People should not try to read more into it than that! (ie: raising the prosperity of other parts of the world so they’ll buy more American goods… finding workers to do work Americans don’t like to do… and all those other similarly bogus arguments)

    The intent is NOT about competitiveness, but rather about shifting wealth in this country.

    It IS a movement-politic….

    And, it is a winning strategy….

  3. 

    It’s amazing how quickly and loudly the isolationist crowd starts to crow. Did some of the respondents above even read the article? Low-wage jobs are being shipped overseas and being replaced by higher paying jobs. How can this possible be seen negatively? I simply do not understand the hysteria.

    And for the person who complained about overseas customer care – are you willing to increase your service fees by 5-10% in order to get 24×7 American support? I would be surprised that enough consumers would say yes to support that model. If you think I am wrong it would be the perfect business opportunity because no one seems to agree with you.

  4. 
    Fredda Weinberg 1 March 2006 at 12:43 pm

    “more information technology jobs today than at the height of the dot-com boom.”

    And what about all those grads in the past decade? We haven’t had as many retirees as those who entered the work force in this field. As they supposed to be content because those of us who suffered are just beginning to recover our careers?

    I think the editors of the NY Times would be more concerned if it were *their* jobs that went overseas.

  5. 
    Dennis Kochvar 1 March 2006 at 11:11 am

    We must remember that the ACM speaks out of both sides of their mouths; they support increasing the influx of foreign technical workers into the United States and then complain about “these� doomsayers who are causing our children to not pursue computer, engineering and research positions. We all know that many of the US technology workers have left the field after years of corporate cutbacks and an inconsistent US IT labor market. Wal-Mart benefits consumers by lowering prices. Do you think Wal-Mart provides fair wages and benefits to its workforce? Oh, that’s right, we just want that low price, don’t we! The citizens of the United States have every right to question the direction of our government and business environment as it affects our citizens. Are these people doomsayers or conscientious citizens?

  6. 
    Spencer Pearson 1 March 2006 at 9:19 am

    The “good news” outsourcing author does not realize how correct he is in suggesting people should “think of the local companies that service peoples home computers…like mechanics under the hoods of our cars.” There is a vast difference between the mechanic under the hood and those who design the car and infrastructure to build it. And the America that designed and built cars still needed mechanics. The “news” is not the number of new low income “hamburger flippers”, it is the loss of the high skill jobs and support structure to the lower cost Silicon Valley’s like Bangalore. In fact it is precisely about the original export of transistor radio manufacturing to the low cost Japan that had been making toy cars out of recycled (American) beer cans.

  7. 

    Corporations betray America every day. They shuffle profits off to subsidiaries in low-tax countries avoiding payment for the infrastructure and safety provided by the US government at the expense of working taxpayers.
    The danger in outsourced IT projects comes when the nation doing the work realizes it has control of the computer systems and starts adding to the code. For example, China could include code which would monitor web usage world-wide in a similar manner it is monitored in China. An outsourced word processing package might seek out certain formats and words to discover and report litigation briefs created using it. Browsers, which currently open by reporting your ‘favourites’ and a few other things to the authoring company could add other reportable items as well.

  8. 
    Ronnie Housley 1 March 2006 at 9:05 am

    Evidently you have not wasted and hour and a half speaking BellSouth’s representative in India to correct a computer malfunction as I have. Neither, I suggest, have you spoken to the Phillipino with Experian, while trying to convey important and confidential information. If you had, you surely would not be so gung ho to hand over more American jobs. When I deal with an American company, I expect to deal with an American to resolve issues. Personally, I can’t afford a translator. As for the computer problem, I called BellSouth during regular business hours and an American, in South Carolina, helped me in less than fifteen minutes. After speaking to two Philipinos, I had to give up on Experian.

  9. 

    You’re absolutely right about a couple of things there, Bill. Yes — competition among employees does cause wages to fall…and prices as well. And yes — some practitioners may leave the field. Indeed, they should leave the field if their labor could be put to use more valuably (and thus more lucratively for them) elsewhere. I’m not sure how corporations are betraying our country by taking steps that allow them to lower their prices, generate greater profits for their shareholders (e.g., pension funds), and create foreign markets for American goods and services. I take it as a compliment, though, that you think I have the ability to lure youngsters into the field. (Economics?)

  10. 

    This acticle does a great job of pointing out the ingenuity, determination, and work ethic of the individuals who will find a way to contribute to the world and earn a living; but to compare jobs like PC technicians with the jobs in research and engineering that are moving overseas is ludicrous.
    I hope the companies that invest their money in overseas intellectual assets learn their lesson when the greatest technological achievements of the next years are born from the smaller US technology firms.

    I support the ACM in their efforts to recruit young Americans to the technology marketplace. American engineers have been and will continue to be a cornerstone of technology inovation even in the face of globalization. Creativity, ingenuity, and detrmination are qualities that are bred into the American culture — these are not qualities provided by the lowest bidder.

  11. 

    The competition causes wages to go down and practitioners to leave the field, as they should. Quit trying to make the betrayal of our country by corporations look good. You are still lying to the naive youngsters you lure into the field. Like whores, you pander to the power.