Outsourcing: a good thing

Traders trade anything that moves, and live anywhere that has an internet connection.

Companies and countries are just ticker symbols and financial markets to us.

Outsourcing is a non-issue for traders: it is simply job transfer across countries.

But how about further inequality (gap between rich and poor) that may arise due to outsourcing?

There seems to be a disconnect between what traders do and what traders think: traders pursue capitalism in its most unadulterated form, yet traders tend not to believe in what they're pursuing: there is something wrong with winner takes all, i.e. outsourcing

Not sure how to resolve this conflict...
 
Quote from mmm:

There may be individual cases where outsourcing does not lower the costs.

When speaking of economics however, we are focusing on macro and hence aggregate outcomes, rather than micro and company specific results.

In aggregate, I think the chain of outcomes I wrote about is broadly accurate.

-- M
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The outsourcing is in a craze where CEOs and upper management are looking for any job to be outsourced in order to create these costs "savings". Most of the jobs at the moment being outsourced do not make real sense to be outsourced. The ones that do are not in the huge numbers that are reflected in job losses.

Perfect candidates for outsourcing were long out of the country before the end of 2001. The latest waves are true professional jobs. I brought up an example but I have friends in the IT industry who have very similiar experiences. And my experience is not with some small shop it's a major bank. There are many many more stories I have from the financial industry with IT situations just because I was in the circle.

These decisions are all about salaries and bonuses and fake numbers. It is not efficient to pay 1/3 of the cost for 1/4 of the quality.

There was a great article by a very intelligent and informed economist posted on ET about a month or two ago. He said about the same thing as I have figured out by reflecting back on my experiences with this outsourcing craze. Things are not as they seem. Outsourcing is not as simple as cheaper labor for the same work. It's not the same work and it's not exactly cheaper in many cases. CEOs and the government talk about how new more intellectual jobs will be created. Well good luck cause the companies have recentely outsourced intellectual jobs that were just created in the past decade.
 
"But how about further inequality (gap between rich and poor) that may arise due to outsourcing?"

just the opposite. it will lower the gap between the rich countries(the us) and the poor country(india). a wage that seems cheap to people in the us might be a bonanza to someone in india or mexico.
 
Quote from le140:

We refuse to take low paying jobs while enjoying the dirt cheap toys that we buy from Costco and Walmart and complaining that jobs are lost to oversea's workers?
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Interesting position given that you yourself would never swap swifters with a Mexican hotel maid.

Are you trying to make yourself feel better?
 
Quote from misctrader:

AT&T to slash 4,600 jobs

No. 1 long-distance company says it would save about $400 million by cutting 8 percent of workforce.
February 25, 2004: 4:07 PM EST

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What else do you expect from a POTS company? Lest anyone forget, there were layoffs at big companies during the roaring 90's.
 
Quote from Mecro:

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Yes some jobs make complete sense to outsource. Generic code writing, number crunching, repetitious BS work that used to overpaid are great candidates for outsourcing. But a lot of these jobs are not that. And this outsourcing craze will come back and bite these companies in the ass.
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The point of all this is that quality can be diminished if it really does not paralize profits. Its the 80/20 rule - you only need to get 80 percent of most processes right in order to get paid. Getting the other 20 percent right typically does not get you another 20 percent in revenue.

The other problem is that by the time many of these poorly thought out decisions are exposed as faulty, the decision makers will be flying on their personal private jets to a desirable location having long since cashed out their compensation.

And by the way getting those 20 percent issues solved becomes a lot more expensive because the experts that were eliminated as being too costly to keep on staff have now left the organization and via consulting its now very expensive to book their services - if you can even book available time with such experts.
 
Quote from chessman:

Well, he answered patiently, "look around this office." All the
computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke, because when it comes to drinking water in India, people want a trusted brand. On top of all this, says Mr. Nagarajan, 90 percent of the shares in 24/7 are owned by U.S. investors.
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look around

Compaq has manufacturing plants in India
Coke has a brand of water just for india - bottled in india
Carrier was once the largest manufacturer of AC units in India

yep American brands made in India

i really like the "It's unfair that you want all your products marketed globally," argues Mr. Kulkarni, "but you don't want any jobs to go."

we import 2.6 times as much as we export with India
 
Read up on a theory by the infamous Joseph Schumpeter called Creative Destruction which has a lot of substance in regards to outsourcing jobs overseas. In fact, Greenspan touched upon the theory for several minutes during his Humphrey-Hawkins testimony before Congress last week.

Basically, there isn't a problem with outsourcing lower tech jobs overseas as long as we continue to develop ground-breaking, cutting-edge technology that attracts tremendous demand for our new products.

Hence, Greenspan stated that we cannot underestimate the importance of our Education system.
 
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