Close
  • Latest News
  • Artificial Intelligence
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Logo
Logo
  • Latest News
  • Artificial Intelligence
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home IT Management
    • IT Management

    Competing With Outsourcing

    By
    Mike DiMartino
    -
    February 23, 2004
    Share
    Facebook
    Twitter
    Linkedin

      Having read Eric Lundquists column (“Technology May Make Outsourcing Obsolete,” Jan. 19) in which he suggested that technology advances will foster new industries that overshadow the outsourcing of mature ones, I would like to make several points.

      First, outsourcing the labor of U.S.-owned companies for software development, electronics manufacturing, semiconductor fabrication and call centers has occurred at a level that even former Secretary of Labor Robert Reich would likely admit is significant. It is possible that robotics, speech recognition and nanotechnology could lower the total number of outsourced jobs or even spur growth in U.S. jobs, but regardless, many jobs are being transferred offshore annually, and the trend is irreversible. The transfer will continue unabated as long as specialized, low-cost labor is available overseas.

      Second, outsourcing is based on cost. As long as U.S. workers earn higher wages than their foreign counterparts, it wont matter how much re-education, subsidization or political debate there is. The jobs will go where costs are lowest. This practice is mandated for any publicly traded company seeking to maximize its profits. Home Depot, Wal-Mart and Target show that the lowest consumer price is the key driver of modern economy.

      One could argue against the social cost and the intellectual property transfer, but without penalties, taxes or dollar-based incentives for U.S. companies to limit the trend, companies will continue outsourcing. Each company is in business to make money and needs to execute at its most profitable level with revenue growth in mind. If the labor-cost savings are big enough, companies will find a way to work around government intervention.

      The knee-jerk reaction is to encourage and subsidize colleges and corporations to train displaced workers in skills such as C programming. But once trained, those workers often cant compete with experienced workers in offshore locations with low prevailing wages.

      Lundquist notes that outsourcing has a significant cost component in its management. However, most companies have found even that cost is far exceeded by the savings that can be realized. Companies that outsource—and manage outsourcing effectively—have a competitive advantage over rivals. Achieving that advantage is what business is about.

      It would be more constructive to think through why we have an edge on a total-cost basis in certain activities and spur investment in those areas. We must identify growth areas that need innovation and capital. Thats where new U.S. jobs will be created.

      Mike DiMartino is vice president for business development at SET Engineering Inc., an electrical engineering services and product development company in Morgan Hill, Calif. Free Spectrum is a forum for the IT community. Send your submissions to free_spectrum@ziffdavis.com.

      Mike DiMartino
      Get the Free Newsletter!
      Subscribe to Daily Tech Insider for top news, trends & analysis
      This email address is invalid.
      Get the Free Newsletter!
      Subscribe to Daily Tech Insider for top news, trends & analysis
      This email address is invalid.

      MOST POPULAR ARTICLES

      Latest News

      Zeus Kerravala on Networking: Multicloud, 5G, and...

      James Maguire - December 16, 2022 0
      I spoke with Zeus Kerravala, industry analyst at ZK Research, about the rapid changes in enterprise networking, as tech advances and digital transformation prompt...
      Read more
      Applications

      Datadog President Amit Agarwal on Trends in...

      James Maguire - November 11, 2022 0
      I spoke with Amit Agarwal, President of Datadog, about infrastructure observability, from current trends to key challenges to the future of this rapidly growing...
      Read more
      IT Management

      Intuit’s Nhung Ho on AI for the...

      James Maguire - May 13, 2022 0
      I spoke with Nhung Ho, Vice President of AI at Intuit, about adoption of AI in the small and medium-sized business market, and how...
      Read more
      Applications

      Kyndryl’s Nicolas Sekkaki on Handling AI and...

      James Maguire - November 9, 2022 0
      I spoke with Nicolas Sekkaki, Group Practice Leader for Applications, Data and AI at Kyndryl, about how companies can boost both their AI and...
      Read more
      Cloud

      IGEL CEO Jed Ayres on Edge and...

      James Maguire - June 14, 2022 0
      I spoke with Jed Ayres, CEO of IGEL, about the endpoint sector, and an open source OS for the cloud; we also spoke about...
      Read more
      Logo

      eWeek has the latest technology news and analysis, buying guides, and product reviews for IT professionals and technology buyers. The site’s focus is on innovative solutions and covering in-depth technical content. eWeek stays on the cutting edge of technology news and IT trends through interviews and expert analysis. Gain insight from top innovators and thought leaders in the fields of IT, business, enterprise software, startups, and more.

      Facebook
      Linkedin
      RSS
      Twitter
      Youtube

      Advertisers

      Advertise with TechnologyAdvice on eWeek and our other IT-focused platforms.

      Advertise with Us

      Menu

      • About eWeek
      • Subscribe to our Newsletter
      • Latest News

      Our Brands

      • Privacy Policy
      • Terms
      • About
      • Contact
      • Advertise
      • Sitemap
      • California – Do Not Sell My Information

      Property of TechnologyAdvice.
      © 2022 TechnologyAdvice. All Rights Reserved

      Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

      ×