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Wednesday, March 31, 2004

Offshoring: The Argument Rages On Via Fortune

The so-called ‘jobless recovery’ has little to do with sending jobs overseas. What we have is a hiring crisis, not a firing one says David KirkpatrickCompanies are pushed hard both by the market and by Wall Street to continually lower their costs. If one company in an industry shaves expenses by sending work offshore, its competitors have little alternative but to follow. If they don’t, their profits will fall, and in turn, their stock price. It’s that or fire all their people when the company goes out of business because its prices are too high and it can’t compete.The reason we have a so-called "jobless recovery" has little to do with offshoring. The number of jobs offshored to India so far remains minuscule—in the low hundreds of thousands at most. What’s causing much more pain is that employers are reluctant to hire. As several have pointed out, we don’t have a firing crisis, but a hiring one. And the reason companies can get away with not hiring is that they’re getting extraordinary productivity gains from their existing employees. David Kirkpatrick's lovely article.

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