Playing the Outsourcing Game

The implication of Globalization's biggest financial offshoot, and what can be done about it
(Submitted for a Journalism class assignment - OpEd piece)

When Alexander Graham Bell's patent for the telephone was granted in 1876, little did he know that it would eventually lead to the emergence of Globalization: A powerful international phenomenon that has paved the path for technological comparative advantage, where countries are now trading based on what they are best-suited to produce. In terms of trading skill, this has become infamously known as outsourcing. A little over a century ago, European nations were scrambling to set up industries in African countries. Now, using mouse-clicks and Skype, the United States' corporate world has most of its operations based in the Asian Tigers like Singapore, India and China, where people are putting in more time for less money.

In the last decade the increasing use of the Internet has taken outsourcing to another level. American workers, particularly in finance and technology sectors, have already begun losing jobs because someone on the other side of the world can afford to work for less. In addition, whopping population growth rates in the Southern Asian region mean that there are more people willing to work for every one U.S worker. The U.S has a labor force of just over 150 million people, compared to China, for example, that has almost 800 million. Yet, the prospect of job-loss seems to be the only shortfall of outsourcing; business is otherwise booming.

BBC correspondent Steve Schifferes reports that Reuters, the world's biggest news agency, hires journalists in Banglore to work the night shift to report financial markets in the U.S. “Most US companies now put out their press releases on the internet, and they all use financial PR firms to release their profit figures just as the stock market opens.”

Software development has also been a key success story for India. Wipro, a Banglore-based software support company, witnessed a 44 percent increase in profits in the first three months of 2007 from providing services to U.S-based companies. “There were no signs that the U.S economy was going to slow down,” adds Wipro chairman Azim Premji. Nevertheless, BBC mentions that “the speed and scale of economic change has made it increasingly difficult for governments to keep their economic destiny in their own hands.”

For such governments, this should have come as no surprise. People talk about skilled labor like its an issue today. Skilled labor was an issue during the industrial revolution. That's old news. There's two things that America needs to wake up to, and before Christmas would be nice. One, the standard of living here in the U.S is higher than in most of its trading partners. Two, there's more that the rest of the world can produce for the U.S than the U.S can produce for the world.

So what's next? Should Americans begin to hold onto their jobs with everything they have, stay longer hours and make better coffee for their bosses? Should they look to other specialized technical or financial fields where the Tigers can't bite?

Neither.

What the world needs now is an influx of American expertise... outside the U.S. What the U.S is better at, compared to their so-called outsource buddies, is corporate management. Let's welcome Outsourcing Phase Two, which really isn't outsourcing, but smart international financial collaboration. If the U.S were to set up shop with the help of their trading partners in less developed countries in Africa and South America, for example, they would not only have more than enough people to train and work; they would also be helping in a strategic phase of providing positions for skilled labor, otherwise known in poorer countries as a decent education.

Everyone is pumping aid into developing countries. But problems with the aid getting to designated projects arise because of corruption and, in some cases, civil conflict. Rarely do we experience the lack of resources or man power in developing countries. Natural resources are abundant, machinery is constantly donated, and people are ready to work. Rather, it is the poor mobilization of these resources and working masses. The U.S would do well in stepping in, not so much to take over such projects, but to assist in their management. China has already begun this in Africa by providing civil engineers to plan urban infrastructural development in Nigeria and Tanzania.

These are not new terms. You and I have heard them, but we've been too caught up in the drama between the East and the West. It's time we stopped shying away from outsourcing and confronted it in a positive and constructive manner. It's time the U.S played its part...in full.