Offshore Outsourcing Soundoff

Last week, I wrote about how many American companies have moved their headquarters overseas, and also about many firms relocating jobs abroad. A main explanation or defense has been that it saves money and is therefore good for the company and shareholders. Meanwhile, critics worry about laid-off workers in America, fearing that their ranks will swell.

I wasn't surprised to receive a lot of email in response to my article. Many readers made many good points, some of which I'd like to share with you now. (Please share your own thoughts on the issue on our News & Commentary discussion board or our new Foolish Globalization discussion board.) Without further ado.

The real pain of the unemployed
Jim D. wrote, "As one of the thousands of IT people sitting at home right now, I can tell you that this is a very volatile, personal issue. I do not blame offshoring for the two layoffs I've experienced since 9/11/01 -- the economic downturn is the culprit there. I do, however, blame offshoring for keeping me out of work -- with hundreds of us desperately answering each job posting, the chances of even getting a resume looked at are almost nil.. If you're interested, I decided to publicly vent some of my frustration about this issue." Jim then offered a link to an article he wrote on the topic, Elegy for a Profession.

C. M. is in a similar position, saying, "Companies that send jobs offshore typically cannot say that they 'freed up employees for other tasks.' In my experience, they FIRE the employees. Moving jobs offshore means that the job in the U.S. is LOST, and the employee is FIRED. I am a computer engineer, and I cannot buy a job. I am trying to avoid moving to a homeless shelter. I formerly worked for IBM (NYSE: IBM  ) and Motorola (NYSE: MOT  ) . I graduated from a good university, with honors, and I have an excellent work history. I was promoted rapidly, but in November 2002 I was laid off. Since then, I have applied for thousands of jobs, but in my industry, there is very little hiring. All the work is being sent to India or China. Motorola is notorious for moving entire plants to China or India, and IBM is doing the same."

Tough questions
J. H. opined: "I think the real dilemma, which you only touch upon in some of your initial statements, is more of a moral issue. Does corporate America (and its shareholders) also share some social responsibility for those people in the American public from whom they are profiting? . I would also like to see transparency in how companies are transferring benefits of outsourcing to the value of the company in terms of better/cheaper services for customers and providing training and jobs for Americans. In the long run this can only be beneficial to the bottom line by keeping and winning more customers. Unfortunately, all too often I believe the real sustainability of companies today is blinded by immediate return on investment."

National prosperity concerns
Bill Eich wrote in, noting that "I can tell you, I came from the software industry, and most of my friends are out of work.... Do you think it wise for the U.S. to lose a talent for which we were once the envy of the world -- programming? I know if the software is no longer written here, you will not have the 'lowly jobs' for programmers to cut their teeth on and that means they will never advance up in technology and in a few years all software will be written in India or wherever. There will be no 'senior software experts' in the U.S. There will be no software industry at all in the U.S. and the government will have a hell of a time finding someone to check the software they buy for the post office, defense, or whatever. Do you think it wise if, in the future, our software for banking, air traffic control, power stations, bridges, water systems, boat traffic, etc. is written 'over there'? Who will check it? We will have lost our industry."

He added, "I think in 20 years the U.S. will be a third-world country because we will have no money for consumer spending, which I hear runs our economy. If we have no jobs we cannot hire those lawyers and doctors who are still here, we cannot buy those cars from Toyota (NYSE: TM  ) or General Motors (NYSE: GM  ) , nor can we get mortgages to buy houses if we all work at McDonald's (NYSE: MCD  ) or are unemployed. Of course no one will be able to buy Big Macs so McDonald's won't need so many employees either."

National security concerns
Robert B. wrote in with another scary scenario, explaining that "The shipment of non-manufacturing jobs overseas will come back to haunt the U.S. in ways yet to be imaged. The problem of offshore outsourcing is more than just jobs. It is about individual citizen privacy. It is about the U.S.'s safety and security. It is about U.S. corporations ignoring and violating U.S. laws. It is about U.S. corporations abdicating their fiduciary responsibilities to others."

He went on to express grave concern about American companies shipping our "protected private and personal data" to other countries, to be worked on by outsourced labor. For example, your medical records or tax return information might conceivably be sent abroad to be transcribed or processed. He worries that many nations receiving such information are not completely supportive of the United States and points to articles by David Lazarus of the San Francisco Chronicle, about the dangers of exporting information.

A view from academia
Dr. Ron Hira, professor at the Rochester Institute of Technology, wrote, "I believe that you have ignored the legitimate questions that those of us raise in response to the weakness in the arguments advanced by offshoring advocates."

He went on to link to his Congressional testimony on the matter, where he detailed what he sees as a growing problem and recommended, among other things, that:

  • "The federal government (read Departments of Labor and Commerce) must begin regularly tracking the volume and nature of the jobs that are moving offshore. The lack of objective data creates too many opportunities for dueling studies. With the data, we can make some progress in trying to solve problems instead of expending more effort on debating whether it is a problem or not."

  • "Congress should rethink how U.S. workforce assistance programs can be designed to help displaced high-tech workers become productive again. We are in a new era of work and lifelong learning, and new and more flexible methods are needed to provide meaningful assistance. This recommendation will require extensive experimentation and resources."

  • "Congress should take affirmative steps to ensure that the U.S. retains the domestic human resource and production capabilities needed to develop and utilize technologies deemed critical to U.S. national and homeland security."

  • "The U.S. needs a coordinated national strategy designed to sustain its technological leadership and promote job creation in response to the concerted strategies being used by other countries to attract U.S. industries and jobs." (Here's some additional testimony by Dr. Hira.)

Your two cents
What do you think? Share your thoughts on our discussion boards -- or just drop in to see what others are saying. We're offering a free 30-day trial of our vast discussion board community right now.

Longtime Fool contributor Selena Maranjian has been posting on Fool discussion boards since 1996. She doesn't own any stock in companies mentioned in this article. For more about Selena, viewher bio andher profile. You might also be interested in these books she has written or co-written:The Motley Fool Money Guide andThe Motley Fool Investment Guide for Teens. The Motley Fool isFools writing for Fools.


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