What are the advantages of outsourcing and who benefits?

There’s been a lot of heated debates out there about the outsourcing of work and technology from America to foreign countries. Looking strictly from the perspective of the average American, it can hardly be said that we, the people, reap benefits from corporate advantages of outsourcing. On the other hand, the large corporations and even some of our State governments who are outsourcing, do benefit from this practice.

For example, perhaps you’ve noticed that when you call your ISP’s 800 number to resolve a problem, the person you end up speaking with is not a native English speaker. Quite likely, this telephone operator lives in India, where he or she attempts to answer your query. The corporation who hires this individual needn’t worry about minimum wage laws here in the U.S., paying just a fraction of what an American worker would require by law. This results in larger profits for the corporation and a larger unemployment rate here in the U.S. Again, the advantages of outsourcing come to the corporate coffers.

When it comes to technology, the corporations have shot themselves in the foot, although you’ll not hear them saying so. When the outsourcing concept initially took off, the corporations went crazy, figuring they could outsource almost everything, including engineering and programming systems. Again, these projects were handed off to foreign nationals who were willing to work for a pittance compared with an American engineer.

It took several years for the supposed advantages of outsourcing to be proven deleterious to the corporations’ profits, as well as the now unemployed American engineers. Another stunningly catastrophic effect of this outsourcing was the loss of America’s technological edge in the world market. Prior to the outsourcing of technology, better than 50% of America’s GDP derived from IT. In the final analysis, a few corporations admitted that outsourcing such work ended up costing them 20% more than if they had retained Americans for the same project. The loss of technological advances through piracy and copy-cat technology is immeasurable and the effects will be felt well into the future.

So it seems that a solid argument can be made in favor of corporate greed breeding the advantages of outsourcing for a very few people to the detriment of many working people here in the U.S. Ironically, this greed backfired and the corporations lost as well.

A final comment on the advantages of outsourcing must be made. Bill Gates recently announced an investment of $200 million into the Indian economy for the purpose of bettering the lives of Indian IT workers and thus, their families. In light of the actual results, perhaps Mr. Gates protesteth too much. Perhaps the real advantage of outsourcing lies in a fatter bottom line and not an altruistic motive.

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