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Valyooo (99.63)

convince me why outsourcing is bad

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December 06, 2010 – Comments (17)

To me it is surprising that republicans oppose it, I would think they're generally more capitalist than democrats

What's wrong with outsourcing? If our labor is too expensive it just means we are unrealistic in our payment expectations. If I owned a business why wouldn't I use someone who's cheaper and probably harderworking? I never understood why people of the same country feel they need to stick together but they don't feel the need to stick together with all humans of the world. I'm open to hearing arguments against outsourcing

17 Comments – Post Your Own

#1) On December 06, 2010 at 4:58 PM, RedlyneTheory (< 20) wrote:

The problem with outsourcing comes after many years. The wealth will shift outwards from our nation and develop the economies of the new manufacturing centers. This is a great thing for the developing nation because it will grow the middle class and in turn create a new consumer base, but it will likely lead to decline of our own standard of life and economy.

I personally am supportive of free trade and fair trade policies, but I have deep concerns in the long run. 

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#2) On December 06, 2010 at 5:06 PM, truthisntstupid (94.09) wrote:

"Always the best price...always."  WalMart has improved the standard of living for millions of people.  I can't convince you otherwise because I agree with you.

 

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#3) On December 06, 2010 at 5:34 PM, Brent2223 (33.16) wrote:

It's definitely short term gain with long term pain.  It's a snowball effect, outsource to a country with no human rights so you can pay a fraction of what you would otherwise, drive down prices and destroy the mom and pop shops, destroy the middle class since all the working class jobs are now overseas, destroy the spending power of the middle class forcing increased price competition, leading to more outsourcing to lower prices even more.  Lather, rinse, repeat.  You're left with the wealthy reaping the benefits of lower prices and middle/lower class in poverty or at least below 'realistic payment expectations' and on food stamps.  Welcome to Capitalism. 

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#4) On December 06, 2010 at 5:46 PM, truthisntstupid (94.09) wrote:

I agree with you, too.  But the unions did this to themselves.

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#5) On December 06, 2010 at 5:56 PM, patrails (< 20) wrote:

Very simple math. If more goes out than comes in, doesn't take long before you have nothing.

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#6) On December 06, 2010 at 5:59 PM, caterpillar10 wrote:

Wwwelll, it's bad if you are a politician and would like to keep your job - or get one for that matter. A perfect example would be Carly Fiorina's senate run here in Cali. All Boxer had to really do was run a few TV ads explaining that Carly shipped 40,000 jobs overseas (or whatever it was - any # in the thousands will do) as CEO of HP and she was toast. As an afterthought the ad mentioned the $100,000,000 golden parachute she opened when she was fired, but hey, if you pay for 60 seconds you may as well use all of them. Marijuana got more votes than Carly.

So, almost any politician is gonna be agin'it if asked - then pray with their fingers crossed that their constituents are too busy looking for a job to check the actual votes cast on behalf of their corporate masters:)

With a real unemployment rate of 15-22% and all the people working who are unable to move up either in-house or laterally - a rate I won't even try to guess - you can bet any govt. or corporate leader isn't talking until cornered, and then, will definitely be agin'it.  Factually, outsoursing will go on until the dollar falls far enough for it to make sense to start shipping the jobs back here.

Therein lies the main flaw of a democracy - at least as far as trying to understand what the hell is going on w/ an issue by hearing what folks have to say. What I do when the news is on is mute the sound and crank-up some heavy metal on the stereo - then it makes more sense. But, I voted for marijuana too so whadda'ya s'pect, man:)      

 

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#7) On December 06, 2010 at 6:00 PM, brickcityman (< 20) wrote:

There's a much more fundamental reason than labor costs... and that is its all about intellectual property and innovation.

 

And no I'm not talking about theft or copying...  I'm talking about the product life-cycle.

 

Every product has a lifecycle.  And thoughout that lifecycle you learn things that cause you to go back and improve your product or the process you use to produce it.  Heck, sometimes you might find entirely new marketable "products" or services while seeking a better way to make your prime product.

 

Certainly, customer feedback is key (meeting additional needs you hadn't foreseen, creating new discriminators in the marketplace). 

 

The design side of the house has similar (and often more prominent feedback mechanisms)...  Ask any engineer if there is something he would like to improve about his most recent project and he or she is bound to have a list. 

 

Smart companies will also get similar feedback from the production side of the house...   Feedback on how to improve design for production and test purposes.  Feedback on how to eliminate defects, etc.  Because lets face it, production is your only chance to really "use" your product before releasing it to the marketplace.

 

The more of these phases you outsource the more fractured your production lifecycle becomes.  Not only are you exposing yourself to theft of intellectual property, but you're preventing yourself from growing your intellectual property because you are no longer as connected to all phases of the lifecycle. 

 

This might not yield problems immediately, but it will over the long term both in terms of losing the ability to improve but also in terms of being able to innovate.

 

There are other reasons I could expound upon, but this is the first one that I wanted to highlight at a micro level (the impact on whole classes of people engaged at various phases of the lifecycle being more macro level)

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#8) On December 06, 2010 at 6:31 PM, blesto (31.64) wrote:

 "I agree with you, too.  But the unions did this to themselves."

They sure did. While all the clamoring for Wall Street and Banking reform, the unions could use a good dose of reform also.

Unions for protecting labor rights is a good thing, but as with most things when big money is involved it can and will be corrupted.

We must remember if it wasn't for people gaining the right to organize, we would still have exploitive child labor here.

Some want to abolish unions outright, but that would be a mistake. The pendulum has been swinging in favor of labor for years and now it is starting to swing back and there may be attempts to erase many gains.

I believe the average laborer isn't greedy. They just want an honest wage for honest work. Fair compensation for their time.

But what is an honest wage? What is fair compensation? Well, I don't have the answers. I would like to direct your attention to the way Costco runs their business and treats their employees. I believe that would be a good model to immulate. Another good company to look at is Netflix.

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#9) On December 06, 2010 at 7:01 PM, OtherOracleOfOMA (67.51) wrote:

It's not complicated: domestic producers simply cannot compete against foreign firms that pay workers 50-75 cents an hour, so they go bust one after another (the US has had some 40,000 factories close in the last decade). You destroy your productive capacity, you destroy your physical income stream. No income stream means you in turn destroy the domestic market; it also means you can't pay your debts, resulting in financial collapse.

This was well understood for most of America's history; it's only with the morally and intellectually perverse "Baby Boomers" did we become foolish enough to think we can build an economy on financial and real estate speculation.

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#10) On December 06, 2010 at 7:46 PM, ChrisGraley (30.25) wrote:

Blesto hit the nail on the head.  As a company you can find a balance between treating your employees well and managing the bottom line. Costco is a perfect example.

Your exports will never be greater than your imports if your products aren't the best value. Costco seems focused on value while still treating the employee well.

Their CEO balances that by not paying out high executive wages. (His own salary was $350k in 2009, I'm not what iit is this year)

There are 5 things that destroy most well established companies.

Excessive management compensation.

Excessive employee compensation.

Excessive shareholder compensation.

Not enough of any of the above.

Excessive government regulation.

If you can find a balance of all of the above, then you can maintain a successful company in a competetive environment.

 

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#11) On December 06, 2010 at 8:21 PM, VExplorer (30.48) wrote:

Agree with #3. In general, the problem is local, benefits are global. So, if you are "globalist" (just want to lift life quality globally) you shoud support outsorsing. But you should forget about "American lifestyle" in that case. Why? Only 5% of population are able to increase productivity to highest level to avoid their job outsorced.

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#12) On December 06, 2010 at 8:35 PM, Mstinterestinman (26.98) wrote:

Our economy is becoming service based most of the good jobs here are services oriented. People want products for as cheap as possible so companies really don't have a choice but to look for cheaper labor. Thats why imo if you want a Good life in America get a services based job or start your own business.

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#13) On December 06, 2010 at 9:52 PM, HarryCarysGhost (99.76) wrote:

south park: they took our jobs!!

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#14) On December 06, 2010 at 10:49 PM, brickcityman (< 20) wrote:

One Macro Point to make (as an addendum to my micro point above)....

 

I believe, though I do not have any research or data to back it up, that having a diverse manufacturing sector...  Supporting both domestic consumption and foreign trade...  Is a bulwark against economic turmoil.

 

Losing balance...  either being heavily dependent on exports...  or relying too much on services...  especially something like financial services which is heavily hinged to interest rates and confidence...  Leaves you open to a degree of concentration risk that inevitably leads to shocks like the one we are still stumbling out of.

 

You'll note that neither of my arguments is particularly nationalistic, but I think at both levels there is a societal component that needs to be recognized as well. 

 

For a society to function there needs to be a healthy distribution of work for all skill levels and capabilities.  To the extent that outsourcing entails sending work from one society to another it can be either very helpful or very hurtful depending on how well each societies skill sets match up to the work available.  If a given society ends up with a large portion of its workforce sidelined that's not a healthy thing...  Even if you can buy a dozen tubesocks for 99 cents as a result.

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#15) On December 07, 2010 at 6:42 AM, devoish (99.07) wrote:

The pendulum has been swinging in favor of labor for years and now it is starting to swing back and there may be attempts to erase many gains.

From 1970 when 35% of Americans were union, until today when 7% are, you think has been a pendulum swinging in Labors" favor and now is starting to swing back to favor capital?!?

Curious.

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#16) On December 07, 2010 at 11:36 AM, Brent2223 (33.16) wrote:

We'll never get to a truly level global playing field since everyone has their own perspective on 'payment expectations'.  If I value a clean yard but my neighbour doesn't, I'll only keep my yard clean until I realize it doesn't matter what I do cause my neighbour's killing the resale value (in capitalism everything comes back to what happens to my pocketbook).  Then I'll sit back and blame all my problems on my neighbour.  Then eventually I'll probably hire an [insert cheap labour reference here] for $1 a day to cut my grass. 

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#17) On December 07, 2010 at 1:06 PM, JaysRage (90.49) wrote:

I think with any outsourcing, the costs of the operation are almost always under-estimated.     With manufacturing, there are significant logistical expenses to be considered, including not only moving the freight, but also holding enough inventory to make up for the fact that it takes several months to move it from point of creation to point of consumption.  

In the IT world, out-sourcing appears to have less of a problem, but in that context, not having the rapid response to changes, as well as the in depth knowledge of the business context causes isssues. 

In a nutshell, outsourcing has it's own costs that are not usually properly understood.  When properly analyzed, the savings is often marginal, and you might as well keep your neighbor employed, instead someone half way across the world. 

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