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Offshore outsourcing affects American workers

There has been so much media attention focused on the effects of outsourcing technology and offshore manufacturing that it’s finally shedding some light on the issue. Whatever the product, there is an effort to ship it outside America to cheaper labor. The effects of this are hurting many aspects of Americans’ industrial and personal lives. It doesn’t matter what you are making, whether you manufacture low- to high-tech products, maintain technology support call centers, write code or create the next generation of microprocessor chips: Outsourcing is affecting American industry and it will only become a larger issue.

We used to think that high-tech jobs were safe from the outsourcing vacuum. It was those nasty metal, rust belt jobs that we were depleted of. It was also thought that America would always be the high-tech job of the future. This is no longer the case. By the latest count, America is losing more than 2,000 jobs a day, across every field -- from manufacturing to engineering and software design positions -- due to outsourcing. I think that number is an underestimate since it’s unclear if it accounts for the other support jobs that are also affected by technology or manufacturing layoffs.

There are several reasons why outsourcing occurs. Corporations are under constant pressure from their investors to increase profits. Going from $9.00 an hour for tech workers to 27 cents an hour for labor, has prompted corporations to overlook other costs associated with outsourcing. Bonuses are defined at the year’s end and that is long term enough to these corporations. As the saying goes, “Wall Street doesn’t do real ‘long term’ well.”

Another reason outsourcing is growing involves America’s social infrastructure and cost structure and how they are very different than the countries’ we are shipping our jobs to. There is no OSHA, health care or child labor laws in many outsourced countries. In addition, more and more companies are viewing the world as a global marketplace and sometimes that requires building factories within outsourced countries in order to sell products. Also, manufacturing companies don’t want to be left behind: everyone else is moving offshore too.

American companies will do what they need to do in order to keep profits up but there are things that can be done differently; there are new ways of combating the flight to other lands. How can manufacturing companies slow down this tidal wave of economic poison? There are things that businesses of any size can do to catch their corporate breath.
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1) Remove the hidden waste in your businesses. Not the people, but the cost of inefficient processes. Thirty to 40 percent of any given process may be wasteful and can be removed, making your products more appealing.

2) Get close to your customers. Design your company to make it so easy to work with you, that your customers won’t be tempted to look elsewhere. View your processes as your customers see them, not necessarily as you designed them.

3) Quality. Harden your processes. Design processes so they don’t allow for anything but superior quality. Nothing less.

4) Responsiveness and speed. Get your customers the right products, in the right quantity, at the right time for the best value.

5) Value. Compete on value, not price. After his trip to China, Rep. James Sensenbrenner, R-Wis., said “It’s not just hard to compete with 27 cents an hour: You cannot, just cannot, compete with 27 cent and hour.” Focus on value, not price.

6) Innovation. Keep one step ahead of counterfeiters by designing better and faster and adding more value to your products. If you find one of your products is being manufactured offshore, you have a choice of losing money or making the next generation so much better that you eliminate the copy cat.

There are always opportunities, start by finding new ones as the old ones are most likely gone. This is a new global economy. It’s responsive to the needs of your customers, even if they are not on this hemisphere.

_________
Bill Bryant is a manufacturing specialist with Wisconsin Manufacturing Extension Partnership and President of eInnovate.

Comments

Maha responded 9 years ago: #1

Your article seems to blame american companies for the exodus.
Politial change in american politics was the only major difference in time between dotcom period and current outsourcing phase. In my opinion,
9/11 effect on economy could have been handled better and differently
by the political leadership. Even during dotcom period, american
companies could have deployed outsourcing instead of encouraging
expensive H1B contractors. Reckless political stewardship, 9/11 and
improved and less expensive communication and quick correction by
american companies led to outsourcing. American GDP continues to
remain strong. As industrialization outmoded certain jobs and careers,
America is painfully preparing for another phase of career obsolescence.
However, America is well prepared; the change could have been
delayed but for the political incorrectness.

Alex responded 8 years ago: #2

In response to Maha's comment. Is it possible to show where the problem really beagn with outsourcing since I find it hard to believe that 9/11 had that great an impact on the content of the article. I am writing a paper on this topic and would find it extremely useful.

janet responded 8 years ago: #3

i think this article helps me with my reseach paper thank you to who wrote it and i diagrre with Maha on how she thinks that 9/11 effected our economy

Melkor responded 8 years ago: #4

I believe we are the problem. We as in the american cunsumer. We beat down the doors at wal-mart and Pre-order the next big product from Microsoft buying it out before it even hits the store. What that says to these corporations is, It Works. We are voting with our wallets. Stop shiting the blame. We are the largest collection of consumers on earth. The fact remains, wal-mart is just to cheap to pass up and microsoft is the industry standard. Then we are Pist at how they do it. Sorry folks, look away if you want that nice fur coat. Cus Theywill have to blow away 'thumper' to get it.

Xirix-Loro responded 8 years ago: #5

In today's world, globalization is a phenomenon that we need to take in consideration. The main purpose of Corporate America is to create the best product possible for the consumers in Amercia and around the world. The companies are trying to keep profits up and cost down to provide the shareholders with a high ROI and to keep those companies afloat. Outsourcing is just another phenomenon that has push us to a higher level of being competitive. We have to look as well as the foreign companies coming to the USA and provides jobes for the American people. We really have to look at both sides of the coins. There will always be pros and cons and the new phenomenons that are not even yet visible but have been blooming through time and we will be able to see soon. EXCELLEN article, i wish i could write more but i don't want to bore you with a long comment.

Joblost responded 8 years ago: #6

Sorry to say, we are giving our childrens jobs to other countries so they can have a future, at the expense of corporate profit.

Kyle responded 8 years ago: #7

I believe that the outsourcing of American businesses is the down fall of American society.

Deepak responded 8 years ago: #8

Hi all,

When it comes to business its a global village, you have every right to get things done from where you are able to maximize your profits.

As far as loosing jobs or hurting the economies, its just the other side of the coin. THe developing countries against which the angst have also suffered the affects of globalization with companies like coca cola, baygon, monsanto and pepsi doing everything possible for their hegemony and badly affecting the local medium scale companies.

rz responded 8 years ago: #9

I say we outsource congress...that's definitely a job that can be moved to india...they make way over the national average...and have the same vested interest in the american people as the people in india do

Dominic responded 8 years ago: #10

Well, even though the U.S. might be doing really well with outsourcing. I feel that the real issue is the fact that jobs that pay $12 an hour here only pay 12 cents an hour somewhere else. Outsourcing encourages third world countries to keep their labor standards low, which directly effects the inhabitants of the people. I feel there should be a moral obligation and responsibility with outsourcing.

Dan responded 8 years ago: #11

Its ashame how we neglect our own people, our own country, simply for financial benefits. Everything revolves around money this day in time. And will be that way forever now. Theres nothing anyone can do about it. No matter how many jobs are lost due to outsourcing, the number will continue to rise as lons as the ecomic gratification is still rising

Natasha responded 7 years ago: #12

Hi. This didn't help us with our project GAHH

Marlow responded 7 years ago: #13

There is something that can be done! Stop buying foriegn products if you can still buy American made products. We lose countless jobs everyday and it is America's fault! Pay a little more for something if it was made in America. It is really simple, if America stops buying items because they are cheaper and started buying items because it was made in America then corporations would have to start making items in America. If the items you buy don't support your job then don't buy them. Example if your a waittress and the majority of your customers work at the Ford Plant by your work then you should be driving a Ford. It was those workers that ate at your resturant and they pay your bills. If that plant was shipped to China do you honestly think your tips or amount of customers you had would still be there? I don't think so. Simple thing to follow if what you buy supports your job then buy it. If it hurts your job then don't buy it. Just try to go out and buy an American made TV, you will not find one. Soon everything will be that way!

michael cheng responded 7 years ago: #14

This is a very good article. It gives me a lot of information for my essay.

zaidali responded 7 years ago: #15

Hi all,
I am an Indian and working in a call center for software support. Well, what I think is that the people of use have increased their standard of living to such an extent that they need luxury in each and every step of life, and even I oppose the outsourcing of the U.S. jobs. We in India are paid 10 times less then the Americans. Well, the Bush administration has messed it up.

Larry Watson responded 7 years ago: #16

Screw corporate America.

Frank responded 7 years ago: #17

I agree. This is the end of the American society. I hope I am wrong. American companies are increasing their profit by sending jobs overseas but the price we will pay is losing AMERICA.

Saf responded 7 years ago: #18

I really liked the comment 'rz' made. Congress should be outsourced to India as well, this will definetly save alot of Tax payer's dollars. As far as outsourcing, American products made with outsourced countries, there will be no one left to purchase American products. There should be sanctions imposed on the companies for outsourcing more than certain percentage of their outsourcing needs.

Barrikuda responded 7 years ago: #19

Outsourcing benefits the investors and the board members of corporations, it does not benefit the American society. It seems that with off shoring, the rich get richer and poor get poorer. The middle class is being suppressed and the gap between rich and poor is increasing day by day by this phenomena. Supposedly by getting cheaper labor we should benefit from lower prices but I keep seeing the rise in prices and the only ones that benefit are the investors with a higher ROI. American people are going to have to options: become CEO of big corporations or just move to China to see if they can get a damn job.

BS responded 7 years ago: #20

In response to 'rz'and 'saf,' I could not understand why you people blame these politicians. If you think about it, there is not a whole lot the Congress can do about companies outsourcing offshore. Why? Simple, one word can explain it. They're "EXPANDING" not "outsourcing."
As for 'Zaidali,' I don't know why in the world you would think that "Bush messed it up"... it's your choice to work in the call center, no one forced you to do so, if you think you don't get paid enough, then quit and find an Indian job! The only reason why there are American call centers in India is because of the costs of labor! (-100 percent markdown). Btw, I didn't vote for Bush either!

In my opinion, there is really no one to blame about outsourcing. If we look at it in all perspective, everyone has a good reason and point. To solve this problem, people have to make choices. If you don't like outsourcing, stop consuming outsourced product/services. If you don't think you deserve your pay rate, don't apply for the job. Simple, eh?

Sue responded 7 years ago: #21

In response to zaidali; we (as Americans) have not increased our standards of living to warrent luxury at every turn. The things here in America cost more, so in turn we need to make more in order to survive. If we make ten dollars an hour, three dollars of that goes to taxes, three dollars goes to gas for our vehicles, so that leaves you four dollars to pay mortgages and food. How is that luxury my dear? The people who should be blammed are the people that are doing the outsourcing and linning their own pockets with the cash they are saving. It is not the president of the United States, it is the president of Dell and AT&T, and any of the other multimillion dollar companies trying to save a buck.

Rick responded 7 years ago: #22

The world truly is changing. We are a global competitor now, and though it can be frustrating and very easy to look for blame, we must learn to compete with the world. Something we haven't had to do in the past as we were the world leader. But, corporate business must turn a profit and our business managers and union leaders must work together to come up with a plan that allows the American worker to compete, not give up their standard of living. We must survive. They do have negotiations to deal with BUT they also must have a competitive plan to compete with the world and that includes the $10.00/day countries. What we can offer is efficiency and quality. We must also focus on eliminating wastes like scrap and rework. We are watching our jobs go to China, Taiwan, and Vietnam and the people there are finally finding a job so they can eat. That's not a bad thing but it might be when it starts to affect the ability of our people to eat. The businesses sending our business are getting richer. They do have to turn a profit. But, the toll that it is going to put on the average American worker hasn't fully been seen yet. We have to prepare ourselves because this is going to be a big problem for our kids and our grandchildren. Big. Let's not look for excuses. Let's promote education for our kids and lets show the world that the reason we are the best is because of the talent that we hold. We have the trump card... we must use it, and it's looking at you in the mirror.

b responded 7 years ago: #23

Your article helped me with my project. Does Maha even know what their talking about?

sunshine responded 7 years ago: #24

I am doing a project on outsourcing. Unfortunately this topic, like everything else it seems, has become a huge political debate. Yes, we are competing with the world, however what are we racing against? If you've truely done research on the topic, you will know that other countries that aren't as developed as America deal with power outages, while we know these people don't get paid at the same wage as Americans, their reliability is questioned as well. Employers face these difficulties and sometimes things just don't work out. We are racing with technology, not the president, or political leaders, and we are wiping our own jobs with TECHNOLOGY! Luxury? What is that? I and many people I know are merely surviving! If you want to keep a job in America, become a doctor, a lawyer, police officer, something that can't be sent elsewhere! Jeez, we could never have too many of those can we? But 15 people a day can call me from different orginizations or countries wanting me to buy something or get a credit card!

monique jo responded 7 years ago: #25

First off, the main problem is the Americans' obsession with consuming more stuff. Compare a house of an American and a Vietnamese. I guarantee the American house will be stuffed with crap that is completely useless, which in some way or another is luxury. Someone mentioned that we are only trying to survive, and that we must pay taxes, have cars, and eat. I never knew that a car was a necessity for survival. Maybe if American cities weren't so spread out, we wouldn't need cars. However, oil and car companies promote that type of urban planning, and try to do everything possible to force people to need cars (in Los Angeles for example, there used to be a train that ran throughout the city...but guess who got rid of that? Surprise surprise). People need to start simplifying their lives, and should try to promote local, skilled craftsmanship. If people instead of buying 100 pairs of crappy shoes made in China, and instead bought a nice pair of locally made shoes that would last 5 or more years, we would be better off. It is also more economically friendly. We are now facing many environmental issues. And that way we keep producing, producing, producing, and sucking the Earth dry of its resources? I don't possibly see how we can maintain that type of lifestyle forever. Stop shopping and start reading.

Lil nephew responded 7 years ago: #26

American consumers need to step up, and stop purchasing cheap products from China. Last time I checked, China was a Communist country. Their products are of poor quality. Maybe we could all just become lawyers and nurses, but I don't think our economy would survive. There are already too many lawyers.

Michael responded 6 years ago: #27

But the resources you guys use are coming from Third World countries as well, America occpies 5% of the world but you are using 25% of world's resources, stop complaining about sharing jobs with other people.

Alex responded 6 years ago: #28

wow. this is one of the few places where I could find enough facts to actually use in my research paper. thanks a bunch!

Alan responded 6 years ago: #29

Some people just dont understand value in anything anymore...by rushing into something that is slightly cheaper but sacrificing quality just makes people more greedy for every dollar they save. They just dont realize that they will have to buy that same crappy product again 3 times for twice the price because they dont understand that quality is more important than quantity.

James responded 6 years ago: #30

Outsourcing does not work for America or Americans in anyway form or fashion (or any other countries for that matter). The only people who win are corporations and governments (at lest in the short term). The global economy is a beast that will only leave longterm economic destruction for all countries in its wake. How? What is the primary reason for outsourcing? Lower cost. Companies take high paying jobs from the developed nations and take them to undeveloped nations. Why? easy they do not have to worry about pesky things like enviormental laws, decent wages and benefits, or government regulations (as many counties do not have developed laws--or officals that cannot be bribed to overlook them). Developed nations like America cannot compete with the slave wages that companies can pay in undeveloped nations and since our own well bribed officals in the U.S. government see no need to protect the American worker this will continue unabated. Unfortunately, the longterm problem for corporate America is what happens when job losses in America and other developed nations take their toll on the economies of those countries (as the oversupply of workers leads to the depression of wages creating a situation where their primary consumers can no longer afford their products?). That is something for economist to chew on.

Kelvin responded 6 years ago: #31

Yeah, to Rick #22. First of all, we are not in the business of working for a living to worry about how we stack up against the rest of the world. We got our college degrees to enrich ourselves both intellectually and literally, not to see how strong we can make america or how we stand in the global rankings. Get A Clue! The concept of work was originally invented to make sure people had a way to pay their bills, but corporations seem to have lost sight of this. Also these corporations are exceptionally evil and greedy and offshore to line their own pockets and the wallstreet investors for rate of return in their investment. That is why they go overseas to pay $5 dollars a day instead of $100 a day in america; the difference is their profit. That is why there is a huge gap between the rich and poor. Plus they don't have to pay that nasty american osha or healthcare to workers. America is expensive to maintain our standard of living in, so we need more money per hour to pay our bills than China. In other words these companies are cheapskates and sellouts to the american worker.

JC responded 6 years ago: #32

Wake Up America and Fight Back if you want to keep your jobs.

This past Sunday April 6th, 2008, The Arizona Republic newspaper printed an article in the Business section that basically provided a “list of what is important” to a company when seeking to move its operation overseas. They are:

• Lower cost of labor – for both hourly production workers and salaried employees
• Availability of trained personnel in your line of work
• Infrastructure for manufacturing support of your products – availability of equipment, repair services, raw materials, chemicals, water supply, industrial gases and electricity
• Proximity to an international airport with facilities for customs clearance
• Business-friendly local and national government
• Foreign export zones and the availability of tax incentives (often called tax holidays)
• Lower rate of business tax
• Non-union labor environment.
• Stability of local currency against the U.S. Dollar
• Local rate of wage and general inflation
• Availability of houses and schools for U.S. expatriate management and their families
• An English-speaking workforce is usually scarce, but a huge plus

Upon reviewing the 2000 U.S. Census data, there are over 18,400 cities, towns, villages, and other such governing groups in the United States. According to the Federal Aviation Administration there are over 20,000 public airports in the United States. There are over 4,000 public and private Colleges and Universities in the U.S. that graduated over 17 million students in 2005, and reported in 2001 there were over 2.8 million high school graduates National Center for Education Statistics, Digest of Education Statistics, 2006.

My challenge to all Americans is to locate these corporations that have moved or intend to move their operations overseas, seek out what they need to be competitive with the global economy and present your bid to keep these jobs in the United States. Local and State governments should on an annual basis contact your local corporations / businesses to see if they have the resources (labor/incentives) they need to keep the company profitable. Companies should provide the American citizens with the same business considerations they give their vendors. Submit a Request for Proposal to the U.S. Cities where you might consider moving your operation. Local governments should gather talented citizens from industry, unions, education, etc., to respond to these RFPs. If corporations don’t offer this challenge via an RFP, then American citizens should stop buying their product or service. After all this is capitalism at its best! This is a time to unite and do what’s best for our citizens and our economy.

I find the article last week to be a slap in the face to all American citizens. Basically stating we don’t have what it takes anymore to be competitive. “An English-speaking workforce is usually scarce, but a huge plus”. Wake Up America and Fight Back.

Wop responded 5 years ago: #33

Look at us now, in a recession and probably going to be a depression as long as this downturn in the economy holds. Globalization of industry is the downturn of our national economy. Start buying American-made products. The only way we can climb out of it, is a new innovative industry that can only be made in America and sold worldwide. As the bubble bursts this is more possible with prices depleting or rising. With unemployment at 20% (it's 15% 'reported) or more, we need something to do to keep us from starving out of house and home. Greed needs to be dismantled from our mindsets. It's all about surviving as a people.

Nodd responded 5 years ago: #34

when American companies outsource, American citizens loose their jobs and have no income. These companies bring back their outsourced products back into the US, but Alas!!! the consumers have no money to by their products because they lost their jobs. The products don't sell as well, some stores are forced to shut down. More people loose their jobs, and they cycle continues, eventually, America will become like a third world country because of poverty. The companies outsourcing the jobs, will eventually start loosing profits because they are not selling. And by then it will be too late....China will become the world leader and we will be begging them for food..

Kirk responded 5 years ago: #35

Nodd, you couldn't be much more on the money. It is a world of greed and want it now. The fate of America still lies in its people. If you have managed to get out into mainstream America, take a look around. You will begin to notice America is doomed. Anyone who has a foot in the door right now, has a shot when it comes to making money, the rest will suffer if they are not already doing so now. Congratulation investors, you have certainly showed where chivalry stands. The object of your drive certain focuses on yourself, stand and show your pride as people who deserve better are suffering at your gain. Do not feel pity, you are on top of the world now. Why should you concern about all those suffering people on which you stand?

wendi responded 4 years ago: #36

The responsibility now lies with the American consumer to stop this madness. We have the power to change the current mess, but only if we band together. Stop buying the crap made in China. It is substandard quality, and is made by workers being forced to work for pennies, by a communist govgovernment. Do not support that, demand m

wendi responded 4 years ago: #37

The responsibility now lies with the American consumer to stop this madness. We have the power to change the current mess, but only if we band together. Stop buying the crap made in China, North Korea, and many others. It is substandard quality, and is made by workers being forced to work for pennies,many by a communist government. Do not support the corporate greed that paid off our government officials who voted for this ridiculous trend. While the corporations and those paid by their lobbyists get richer, we the people are losing our homes, jobs, and our way of life.

wendi responded 4 years ago: #38

Stop buying the crap. Stop shopping at WalMart. Stop taking calls from India or the Phillipines. Only we the people can do this. If we band together, and stop doing what they want us to do, we can take our country back. Corporations will be forced to bring jobs back to America if no one will speak to these call centers off shore. Ask what country they are calling from, and when they tell you, DEMAND to speak to someone in America, they have to let you. Tell everyone you know to do the same. This country was based on a belief of

wendi responded 4 years ago: #39

WE THE PEOPLE, lets get back to that.

(hate this computer, did not mean to post before I finished previous comment)

Samantha responded 4 years ago: #40

I agree that America is being flushed down the toilet by outsourcing. Many people are being stricken by proverty and the number just grows everyday.

Dennis responded 4 years ago: #41

Well even though this was written in 2004 it still applies to what’s happening to the American workers. Corporations want to cut cost so they can bring Wall Street investors higher ROI, Top management get bonuses bases on profits. They claim that they have to outsource to be competitive, but the internal waste and lack of long term vision still remains. What happened to long term planning, innovation, streamlining to improve Efficiency in manufacturing? We cannot be a country based on services only, you have also make a product and service it.

The largest computer company laid off 15,000 people in the UK & US, only to then higher that many people in their India operations, then they took a tax right off for restructuring.

If a company wants to offshore its workforce then we should increase their taxes, not give them tax breaks!

Hackysacky responded 4 years ago: #42

The CEO's and shareholders of companies who engage in this practice should be prosecuted. I bet these lowlifes teamed up with wall street to learn how they could strategically rip off college grads and make themselves rich by outsourcing. People look for the payoff of graduating from college and the companies act like "Who us? You want us to pay your good wage. Naa, we'll just go overseas and pay $3 a day and keep the savings." No wonder there's such a big gap between rich and poor. Capitalism must mean to capitalize off the misfortune of workers having to work for these people.

Kathy responded 3 years ago: #43

I lost my job as a work at home customer care rep to out sourcing. I am 62 years old home bound to to medical issue. I have been trying to find another job from home that would allow me to pay bills and keep my home. Appling for social security is not going to pay my house payment let alone food and power. I also lost my insurance due to the cost of Cobra which would take about 2/3 of the unemployment checks I recieve. There are others like me that needs our country to ban outsourcing. But the powers to be seem to think it is more important to save their pennys. People like me willing and wanting to work from home, to stay off of welfare. Yes I could apply for early social security My house payment is $850.00 Monthly I would recieve about $835.00 My ex husband of 25 years ran off and took my retirement savings. I am out of the nitro I am suppose to have every night. I am not eligible for disabilty it is not that severe according to them. I could go on with my pity party but I know I am one of millions of Americans with simular issues. I think one way to solve the issue is to fine each company a very large fine if they are outsourcing Jobs that service's other Americans, I cannot tell you how many times I spoke to people before I was layed off due to outsourcing who all started there issues with "Thank God you sound like you are American I can understand you!" (That was when only half of the customer care calls were being outsourced). Now all of the calls from my former postion with this very large company , I don't think this site wants me to mention the name. I wish I could so that every American who uses there services would ban them from there lives as they have Banned American workers from there jobs. Sorry to be so spitefull but I was one excellent worker who lost her income and pride because the big guy in control thought outsourcing a good idea for busness.

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