Easy for you to say because outsourcing is benefiting YOUR country. Losing my job for YOUR benefit is not an option for me. I like to help the world but not losing my career over it. There are charities to give to help other countries but my career and livelihood is not for charity. Sorry!
Look, if foreign countries and the U.S. were all ONE country then goods, services, and taxes would benefit us all in the U.S. But the reality is, this is not the case.
So as a country, too many businesses have been getting away cheating the system by not paying taxes by hiring illegal labor; firing American workers to replace them with foreigners either on H1-Bs or outsourcing; and GUESS WHAT, the whole system breaks down.
Our government has, conveniently for the rich, forgot to protect its citizens and companies from unfair wage, currency, cost of living, labor practices, regulation, and environmental competition overseas. Now we are in an economic mess with double digit unemployment and good jobs evaporated.
It is time for U.S. corporations to assume economic responsibility to the U.S. and not to its stock price. Enough is enough. Life does not have to be Dog eats Dog just because certain economic elitists deem it to be for unscrupulously lining their own pocketbooks.
My first semiconductor job was at Intel when I was a summer student back in 1980 and my last was with TSMC. Both are leaders in the semiconductor industry. In between I have observed first hand of fall of US semiconductor manufacture industry. And I had no choice, but moved from California to Hsinchu, Taiwan.
Among US semiconductor companies Intel is the only one still keep a strong manufacturing base in the States. Others except IBM have gone to astray. But IBM is selling development capabilities, not real manufacture. Not even Texas Instruments can compete. Why?
Itís ECONOMY, stupid!
Intel has a lucrative and nearly monopoly in the microprocessor business. It sets the standard as well as the price. On top of that it had visionaries including Gordon Moore and Andy Gove. Their legacy helps to hold the manufacture tight.
Think about a new modern fab takes at least US$7b to make it. For investment only a fool would put all his eggs in one basket. One splits $7b into 1,000 shares, which is $7m each, for investments. Chances are the results would be much better than building a brand new fab.
Tell me if you had the money where would you put the money in.
On top of aforementioned, environment cost in Asia is much cheaper than those in the States.
Unless our capitalist has a socialist mind. The situation will not change.
Very well said. Remember that India and China are mutually exclusive countries. They pay no TAX to the U.S. thus sending all our jobs to these countries does NOTHING for our economy except some CEO's stock options. The damage to our economy is clear cut when no jobs exist for our citizens because they went overseas.
There are higher economic issues at stake here and not just some business making more profit from using some foreign countries' labor force. We need the work too!
Capitalism should follow Democracy and not the other way around.
these hurdles could get overcomed with your determination.
If you send some of your best manager/talents there and build up a local team fast, you win.
If you send some of your tier 2 manager there they will build up a tier 3 team for you. your money wasted.
Anyway this is tough for areas need high management skills. So non US internet company could beat local players in china, google, ebay, amazon etc.
but for areas need less management skills, copy and paste jobs, this got be easier and we see many success story. GM, Dell etc.
Your post reminds me of a story a former manager of mine told me, way back in the '90s when "RONA" (return on net assets) became the corporate initiative du jour.
He had been to a management training seminar where the participants teamed up and each team ran a fictitious company for several quarters, with the goal of maximizing RONA.
Being smart engineers, my manager's team looked at the equation and thought, "well, increasing the numerator is difficult, but decreasing the denominator is easy." So they got rid of most of the net assets and won the game by achieving the highest RONA.
But the instructor was annoyed, and pointed out that such a strategy would mean the company would disappear in a few years as sales of existing products declined and there were no new products coming in to take their place.
So what? They achieved the objective they were presented with -- maximizing return (profits) in the short term. Had this been real life and not just an exercise, they would've all gotten nice bonuses, and when the company went under they could just move on to new jobs at another company, right?
It's kind of interesting that this was back in the mid-90s, because in real life some companies seemed to follow exactly such a minimize-the-denominator strategy in the years that followed. Some of them are still around, but are mere shadows of their former selves.
Companies must make a profit or go out of business, countries must maintain a trade balance or go bankrupt, people need to work to provide for their families. There needs to be a balance. What we are seeing here is that the cost of doing business solely within the US is much higher than using offshore manufacturing. Therefore, companies move manufacturing to lower cost areas. It is not personal with companies "just business", it gets personal to the people out of work. It gets personal to the places that have lost manufacturing jobs in many ways: house prices hurt, retail stores hurt, restaurants hurt, the effect ripples out into the community. The incentive to create jobs and build wealth has been hurt by the current laws and political environment. Case in point: Health care. This new tax/cost increase on businesses translates into higher costs for health care killing growth. The inaction of congress to address the tax cuts puts further negative pressure on business: resulting in layoffs. We must remove the penalties for success. We need to start asking ourselves what kind of America to we want to hand off to our children.
Some valuable information for you folks:
1. workforce quality of china etc is equal or better than US. yep, china can make spaceship and supercomputer if you run it wisely.
2. there are some hurdles to offshore bussiness.
a. who to delegate.
3. (a) is the biggest challenge, delegate is a triky job. away from your home/future into an unknown... Most people don't want it. So who should you send ?
(to be continued...)
Outsourcing is not a problem but a symptom and it represents something very seriously wrong about our corporate culture and stock market.
Stock Market and Wall Street: Corporate Managers are judged as reflected on stock prices by over emphasis on short term performance primarily driven by cash flow performance. This discourages public companies from making any long term investments in product development or tooling if that adversely affects short term cash flows.
Corporations have therefore modified their behaviour to look for improved cash flows without making any large investments in general. Outsourcing addresses both of these issues. First it improves the profit picture immediately and secondly this improvement does not require any investment. So the development and manufacturing moves off shore. With 3 Billion plus people at low wages and trying to improve their standard of living will satisfy this need for a very long time.
The only thing we can do and is in our control is change the way we reward the managers for long term sustained growth irrespective of Wall Street. This is possible provided we walk away from simple sloganeering and seriously address the issue of value creation and compensation.
I hope the academia may offer some alternatives in this respect. The political parties of any color are not capable and will not be able to provide leadership in short or medium term.