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Saturday, October 30, 2004

Why Outsourcing Isn’t Really the Issue

Fortune's David Kirkpatrick writes,In the Age of Globalization, outsourcing becomes just another way for U.S. companies to remain competitive with foreign counterparts —and ultimately keep jobs at home. Kirkpatrick addresses outsourcing critics quite intensly. Excerpts: Companies typically now see themselves competing in a global environment, with customers, resources, suppliers, and employees potentially being anywhere. The problem is that just about every American company now has non-American competition. Over time, companies from every country will have access to the same resources in any country. This is another one of those disturbing but world-changing facts that emerges from the existence of the Internet and a globalized economy. If there is an opportunity to reduce costs by outsourcing some functions to other countries but a U.S. company is prohibited from taking it, what happens if their non-U.S. competitor does? We risk not only losing the outsourceable jobs, but all of a company’s jobs as it no longer can compete.
But only a resolutely parochial or ignorant nationalist can deny that there are good aspects to these globalizing changes. It’s hard not to be sympathetic to the aspirations of the world’s poor hordes that are willing to work incredibly hard just to get a portion of the wealth that we take for granted. If you don’t think that the sheer numbers of such people will fundamentally alter our lives in coming decades, both for better and for worse, you simply aren’t paying attention. According to the Population Reference Bureau website, more than 90% of the world’s population growth through 2050 is projected to take place in poor countries. We are just 290 million in a world of 6.4 billion people. We need to start thinking harder about what that means. Kirkpatrick again writes brilliantly on this topic - he is quite right. Offshoring should be viewed as means to become more competitive and thats the way forward looking US corporations are beginning to view. US investors are asking tech entrepreneurs about India leverage strategy before making commitments to additional funds. Major tech companies( providing leadership to US) seeing the trend have rightly beginning to move engineering/support functions to India like Oracle. Google,Kana,SAP all follow - This is for not only maintaining leadership - in a few cases for survival itself.
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