It seems a long list of misconceptions about outsourcing will never be enough for the naysayers. So, here’s another list that has more boring facts and lecture notes than you’ll ever hope to discuss in your Economics class.
1. American workers in manufacturing lost their jobs to offshore outsourcing.
The outrage against outsourcing is understandable. Many states that were largely dependent on manufacturing saw a rise in unemployment.
But, it’s also ridiculous for Trump to continue claiming that offshoring or overseas outsourcing stole those jobs. The truth is those jobs were never designed to accommodate the American workforce.
Those jobs involve routine, non-cognitive tasks that a machine can do at a lesser cost and much faster than a human being. Basically, automation killed many of the low-key manufacturing jobs of yore. Today, only jobs that require human intelligence, empathy, and creativity remain in industries that were ravaged by automation.
Sadly, Trump has been selling a pipe dream to his supporters. Manufacturing jobs for the less skilled are gone for good.
Valuable semi-skilled manufacturing jobs are not, for the most part, going to return to America, or anywhere else, because they were not simply shipped abroad. They were destroyed by new ways of boosting productivity and reducing costs which heightened the distinction between routine labour and the rest of manufacturing. There is no vice that can squeeze those genies back into their bottles.
Assembly and packaging processes add little value to the product. It’s more important to optimize research and development first. This adds value to the product’s functionality and design. Afterward, companies may focus on raising efficiencies in your supply-chain management and after-sales support. This strengthens their customers’ loyalty towards their brand.
2. Companies outsource to China and Mexico because of “cheap” labor.
The reason why plants were built in places like China and Mexico is not only because of low-cost labor. That was cherry on top. Companies offshore or nearshore their operations to other countries because of low tax rates. Another reason is to cut down overhead costs, such as electricity, water, rent or property taxes, and other expenses. When they choose to outsource with an offshore vendor, the costs are even much lower, and this attracts American companies – whether big or small enterprises – to offshore outsourcing.
Low-cost labor, however, in outsourcing does not translate to exploitation or slavery. Deciding one’s salary is cheap based on your country’s standards incorrectly assumes that the offshore employee will be spending the same amount each month as onshore staff. This ignores the disparity in the costs of living for different countries. A paltry $600 per month may not be enough to provide for a family of four in the United States, but it’s more than enough to support a family of six in the Philippines.
Here’s another reason you may not have thought about. Globalization happened and the talent pool just went international. Advanced technology has made it possible for American companies to hire remote workers in other countries. Businesses have the right to choose the people whom they believe are highly qualified and competent, and also cost-efficient to employ in the long run. Again, this does not mean they’re paying them “peanuts.”
3. Foreign-born workers were able to steal jobs from American employees because of outsourcing.
There are a hundred times more IT workers in the United States today compared to the labor force more than 40 years ago.
The number of information technology (IT) workers now stands at 4.6 million, compared with just 450,000 in 1970 according to a new report from the U.S. Census Bureau’s American Community Survey. This upsurge means that IT workers now represent 2.9 percent of the U.S. labor force.
It was noted in the same press release that 24% of the jobs were held by foreign-born workers. But, this is just in IT, and the numbers inversely show that more than 60% of IT workers are native-born.
This is still larger in comparison to other high-earning occupations, such as in medicine where more than a quarter of U.S. physicians are foreign-born as well as in the healthcare professions. In 2014, more than 15,000 foreign-born health care workers, including occupational and physical therapists, dentists, pharmacists, and other health professionals, received H1B visas to work in the States.
Here’s another fun fact: only 6% of all immigrant workers in the United States are employed in professional, scientific, technical, and management services. So, who has 94% of those median-earning jobs? Your answer is as good as mine.
4. Outsourcing sends money overseas and causes a trade deficit, which is bad, for the United States.
The buck does not stop with offshore staff working at a remote location for American clients. International trade flow does not suck the dollars out of the hands of the Americans and leave them wanting.
A trade deficit is not always a bad thing either. A year-on-year increase in trade deficit indicates a strong GDP growth. This trade imbalance is inevitable as more labor-intensive products are manufactured outside of the United States.
And, any potential downward pull on the U.S. dollar as a result of this deficit will only benefit the American people in the end. As the Federal Reserve tries to lower interest rates, the U.S. dollar weakens in response. This can lead to a decrease in trade deficit and an increase in GDP growth as “local companies find more success in exporting their products and local customers tend to pass on foreign goods as their prices rise.”
Look at the bigger picture. Outsourcing to developing countries can boost the US economy in return. How? The U.S. exports many of its goods and services to these countries. When investors hire local workers, they raise the purchasing power of these citizens. As a result, these employees become a new consumer market for U.S. goods and services. They can buy anything they want from Amazon or eBay because they have the money to spend.
5. Workers in foreign countries can’t be trusted to do the job right.
Major universities in the United States and the United Kingdom continue to place among the top 10 in World University Rankings each year. Yet, this does not immediately imply that none of the offshore staff you hire from other countries are stupid or uneducated.
Don’t measure their abilities by their lack of advanced degrees or the quality of their education. Look at their ability from a learning standpoint. Consider how fast they learn new tasks and apply what they have learned effectively in their work.
Many intelligent people go through a less steep learning curve than others in the same line of work. These are the kind of offshore workers you’ll want to hire. Smart, trainable and eager to learn. Add good work ethics to your criteria, and you have the perfect staff.
6. Foreign workers — whether they’re working out of an air-conditioned office in the Philippines or slaving through a pile of work at a comfy office in Chicago – can’t be trusted. Period.
Workers in Asian countries have a different set of behaviors towards work and their bosses. They traditionally use honorifics to address their elders. They also use them to respectfully address people who have a higher social and economic standing.
Finally, they have a greater appreciation for their jobs. The money they receive as income helps them provide for their family and save for the future.
When it comes to building trust and showing sincerity at work, offshore workers give their all to deliver the best work they can. This kind of attitude can’t be beaten, and that’s why offshore outsourcing provides the best solutions to your staffing problems.