Bloomberg View: In Defense of Outsourcing

The U.S. presidential campaign has gotten sidetracked on a debate over whether Mitt Romney or Barack Obama is the worst offender when it comes to offshoring U.S. jobs. Although the claims on both sides amount to little more than vote pandering, this is still a debate worth having. Among other things, it reveals that the critiques of outsourcing made by Obama and Romney are misguided.

Economists who study global labor trends say companies create jobs outside the U.S. not just because labor costs are much lower, but also to pursue sales opportunities in new markets. They want to be closer to the economies that are growing the fastest and to be able to hire locals who understand the cultural and consumer trends. Even as labor costs become more equal, companies would still hire abroad because that’s where the talent pool often is. Companies that don’t do this for some patriotic reason would be at a disadvantage to European and Asian competitors, which would probably cause market share to drop and eventually result in U.S. layoffs.