Global Sourcing Not Outsourcing

An illustrious panel of thought-leaders from US Universities spoke at Harvard University 2nd May session on “Off-shoring”, spearheaded by Professor Blinder’s provocative remarks, that some saw as generating alarming fear about outsourcing. However, Professor Bhagwati asserted that Blinder’s predictions might “not be based on solid data”. Professor Lawrence called for a less alarmist approach and astutely explained that it was not “US jobs” that were going abroad. These were “IBM’s jobs” or “Citigroups jobs” etc., since the jobs belonged to these global corporations, not to any country. He also very wisely concluded from Prof. Blinder’s statistics itself that 74% of US jobs will never go abroad and are “safe” in the US. He wisely suggested that this transition should give the US an impetus for innovations in technology strategy and economic planning, and should be seen as a “Learning moment”.

I would like to add a few perspectives to this debate, after having insights into corporations on both sides of the ocean:

-Since some spoke of the “cost of outsourcing”, what might the “costs of NOT outsourcing be”--- US corporations becoming totally non-competitive in the global marketplace, leading to the shutting down of companies and colossal job losses, instead of the limited job losses today, seriously damaging the US economy!

-The demographic factors were not mentioned. The aging population in the US, and the increasingly young working-age population projected in India that would become available to assist the US economy, needs to be considered. It is projected that the US will NEED outsourcing and immigration to fulfill its needs for technically skilled workers to maintain its technical and economic leadership.

-Indian companies like TCS, Wipro and Infosys are now hiring Americans in America and for India (Asia Times 10 August 06: “Indian jobs for anybody, anywhere”), creating more jobs for Americans. So it is not all “job losses”, but also job gains for Americans.

-R&D in India is contributing to the economic competitiveness of US companies, since a majority of the Fortune 500 companies have their R&D Centers in India. So off-shoring R&D is helping the US

--In a networked environment, globalization is not reversible. Businesses need to go, and will go, no matter what professors or economists say, to wherever they can best source most cost effectively and for quality.

-The real issue is in how the corporations and the US government handle the transitions and job losses on the US side and where they invest the monies saved by outsourcing.

- The brilliant minds on that panel could have provided some incisive and nationally helpful insights on “How can we, as educators, help the US educational system prepare for this emerging future and leverage it to our advantage, since off-shoring and globalization will continue?”

I would welcome comments on the above or possible answers to the last question.