Alexander Hamilton Institute
International Trade

Outsourcing Jobs

Down To Business: Offshoring Mania Goes To Ludicrous Extremes

By Rob Preston
May 19, 2007

Whether it's tech or journalism jobs we're trying to protect, the public
discourse has gone over the top.

It's hard to decide which is more amusing: the revelation that a rinky-dink
Pasadena, Calif., Web site is outsourcing its "local" news reporting to
journalists in India, or the shrieking response of the journalism establishment.
It just goes to show that when it comes to the outsourcing and offshoring of
services and jobs, no industry is unscathed.

In case you missed the j-sourcing brouhaha, the editor and publisher of Pasadena
Now is paying two reporters--one in Bangalore and one in Mumbai--cut-rate wages
to cover the Pasadena City Council from afar. Now, Pasadena Now, an online rag
that attracts about 45,000 visitors a month, doesn't pretend to be The Los
Angeles Times. Yet journalism professors and other high-brow media pundits came
out of the woodwork to decry the site's offshoring arrangement as ill-conceived
(you can't possibly chronicle the inner workings of city government from 9,000
miles away!), impractical (the time and energy spent checking the facts and
cleaning up the copy will offset any cost savings!), and a bone-chilling
precedent (Pasadena Now today, CNN and the New Yorker tomorrow!). "Nobody in
their right mind would trust the reporting of people who not only don't know the
institutions but aren't even there to witness the events and nuances," seethed
USC journalism prof Bryce Nelson in an L.A. Times story. "This is a truly sad
picture of what American journalism could become."

Haven't we heard these kinds of protests and this line of reasoning somewhere
else? We're told that offshore developers and call center agents don't have the
tech chops or communications abilities of their U.S. counterparts, and that they
can't possibly appreciate the business nuances that are a big part of the job.
And with all the training and hand-holding and do-over work required, these
cheap offshore workers are terrible investments in the long run.

If that's truly the case, U.S. companies will realize the error of their ways
soon enough. Dell, for one, moved some technical support back onshore after its
U.S. customers complained. MONY, Sprint Nextel(S), JPMorgan Chase, and scores of
other companies have reclaimed outsourced IT operations after figuring out that
they were losing a competitive edge. Other companies burned by offshore projects
have learned to be more selective or to manage them differently. Ultimately, the
people who run Dell and JPMorgan Chase (and Pasadena Now)--not a bunch of
disengaged critics--will decide whether their customers and financial interests
are best served by offshoring. Offshore experimentation is inevitable and
unstoppable, but it's also reversible.

Related to this rancorous offshoring debate is the practice of importing tech
professionals from India and other countries under H-1B visas. Legislators and
public policy critics are trying to right the program's "abuses"--which boil
down to companies in the United States bringing foreign nationals here to work
because they're skilled and relatively inexpensive, and because they fit into
the companies' global aspirations. This hiring is deemed unfair to displaced
American workers.

As evidence that the offshoring and H-1B visa paranoia has spiraled out of
control, a site operated by the Public Broadcasting Service reported last week
that IBM plans to terminate 150,000 U.S. workers, even though the company
doesn't have nearly that many U.S. workers. Meantime, a worker group at IBM
called on U.S. colleagues to walk off their jobs for 15 minutes on May 15 to
"tell IBM to stop abandoning good U.S. jobs." While you're at it, why not hang
"expendable" signs around your necks?

The best way to prove that your job or function isn't easily or economically
outsourced or otherwise replaceable is to prove every day that you're hungry,
flexible, creative, and thus indispensable to the organization. If you're not,
then yes, you're vulnerable. It's just the way this global economy is and will always be.


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