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Small Business

Overseas Outsourcing: Anger Rising

By Christopher Kenton

What disturbs me isn't the anger that people express over losing their jobs, or even the petty duplicity of lashing out at the easy targets. I understand those responses and sympathize, having lost 95% of my own business in the wake of September 11. What disturbs me is the deeper hypocrisy among those who argue passionately for solutions in ways that mimic the problems they decry.

For example, most writers who complained about corporations cited the cynical slashing of American jobs in order to prop up short-term stock prices on Wall Street. As just one more charge against greedy corporations, that point is hard to argue. But it seems to me an all-too-convenient catharsis to shake our fists at Enron and Worldcom, while we continue gorging ourselves on an orgy of products and petty entertainments, and doing so with no regard for the consequences of our short-term self-gratification -- until, of course, we have to pay the bill. Our culture is a mirror image of the greed at the top, and we worship it too much to ever examine ourselves and our complicity in the system. The main difference I see between us and the CEOs we've come to hate is one of scale and opportunity.

Y2K'S FALSE ALARM. Another example. The solution readers most commonly proposed to remedy the outsourcing problem is a trade barrier on overseas labor. Why? Because a high tariff on overseas labor would remove the incentive for U.S. companies to send jobs to cheap foreign markets. Some even say such a barrier would be in the entire world's best interests, since foreign markets don't adhere to our standards of employment and environmental regulation. On the short-term surface, that sounds reasonable. But I have to ask, how will propping up domestic costs improve the working environment overseas, or help Americans compete for international projects? And what is the underlying rationale for protecting a cost of labor pegged in large part to our sky-high standard of living? Is it a fundamental tenet of American patriotism that we have the right to consume the vast majority of the world's resources? And if it is, why shouldn't it also be the right of greedy executives to enjoy the same massive advantage over their workers in terms of standard of living that we as a nation enjoy over the rest of the world?

As readers tore into me for outsourcing a job, they not only blamed people like me for causing the current economic crisis, they predict that, as American workers lose their paychecks to foreign workers, consumer confidence will collapse and destroy the American economy for good. Look, they argued, it's already happened in manufacturing.

Not to try and score any easy points, but I have to say that whenever I hear such doomsday scenarios, I can't help thinking about Y2K. The truth is we don't have a good track record at predicting the path of our economy, even when we have what looks like incontrovertible evidence. But doomsday predictions are a favored technique for making political points and influencing policy -- in fact, it's just what those greedy corporations did in setting up the case for the H1B visas.

CHICKEN LITTLE WAS WRONG. Now before you haul off to write me an angry e-mail, let me state where I stand. H1B and L1 visas need to be reformed to require accountability from corporations that claim a need for foreign workers. But trade barriers for outsourcing overseas seem to me to be problematic -- I think we're trying to protect something that is simply unsustainable. In the throes of an economic collapse that may seem like a bitter pill to swallow, but if you're going to charge corporations with the crime of short-term thinking, you need to look at the long-term impact of artificially sustaining an elevated cost of living. Indian firms have already started citing an increase in wage levels that may threaten their competitive edge, so I'm not going to take doomsday scenarios of terminal job flight as an article of faith.

For my own part, I will continue to explore the opportunities and weigh the ramifications of offshore development. However, I will also continue to provide contract jobs to a top-notch team of local software developers, who all make high wages on projects I bring to them. I won't do that because I'm patriotic, but because, as a team, we provide unique capabilities my clients continue to value. As best as I can tell, that's how business is done.

If you want to flame me this week, let's at least take the discussion another step. If you think overseas outsourcing is evil, tell me precisely what you recommend as a solution, and how you think that solution will play out in the long run. I'm particularly interested in hearing what role you think American business plays in the world economy. Should we also not invest in foreign markets? After all, that money could be spent on projects at home.

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