# How exactly does outsourcing make us stronger? **URL:** \ **Category:** Great Debates\ **Created:** [March 17, 2004, 2:44pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846 "2004-03-17T14:44:13Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Spectre\_of\_Pithecanthropus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spectre_of_pithecanthropus/32/12343_2.png) [@Spectre\_of\_Pithecanthropus](https://boards.straightdope.com/u/Spectre_of_Pithecanthropus)\ **Post date:** [March 17, 2004, 2:44pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/1 "2004-03-17T14:44:13Z")
Outsourcing’s cheerleaders like to tell us that by making American businesses more competitive, it will strengthen the economy and actually create jobs here. My simple question is, jobs for whom? What kind of jobs? Cheap imports flood our ports and lead to many jobs for the truck drivers who haul them from the docks up to your local Wal_Mart, and many low wage jobs in that Wal_Mart selling those goods. But how can any well paying jobs come out of this scenario? What will an “ultra-outsourced” economy look like? Will nobody have any disposable income except for a few entrepreneurs, their lawyers, and a few others, perhaps doctors…in short anybody whose work cannot be moved? How will such pressing techological crises, such as the need for desalination and alternative energy be solved when an engineering major offers no better hope of future employment than not attending college at all? ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [March 17, 2004, 3:16pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/2 "2004-03-17T15:16:15Z")
New management in our department led to a couple rounds of layoffs last year, but the layoffs actually started when Tata (an Indian company) came in. Suddenly, an extremely important project that many of us were working on became “unimportant”. We could “concentrate on other things” while the people from Tata worked on the other thing. So I believe that outsourcing did lead to the loss of my job. (And I think “Tata” is an appropriate name, since their arrival means the departure of others.) I’ve been out of work for five months, and haven’t had any interviews despite the number of résumés I’ve sent out. So “How exactly does outsourcing make us stronger?” I think it’s along the lines of “What doesn’t kill you maked you stronger.” :rolleyes: ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 17, 2004, 3:27pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/3 "2004-03-17T15:27:33Z")
It depends on your definition of “us”. If you are a stockholder in a company that increased profits by employing foreign workers, then clearly you will say that America is stronger. But since [less than half of American households own any stock at all](http://www.sia.com/press/FAQs/html/question11.html), improving the profitability of companies whose capital investment is in foreign economies is of little benefit to most people, and can hardly be credited for a stronger America. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [March 17, 2004, 3:30pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/4 "2004-03-17T15:30:28Z")
Look, there’s more to the economy that just you and your company. All outsourcing means is that instead of performing non-core work in-house - payroll, IT, mailroom, marketing, advertising basically all the shit that isn’t the companies actual business - a company will hire those tasks out to a company that specializes in those services. For example - my company does not have a payroll department because we are small. We outsource payroll to some company that specializes in payroll services. It makes the economy stronger because: -reduces costs for companies which translates to lower prices -lets companies focus on what they do best - designing, manufacturing and selling their products -creates opportunities for specialized services companies -will probably reduce layoffs because companies don’t have to hire for projects and then layoff. The can outsource consultants to come in and leave when the project ends. ---
**Author:** ![Rashak\_Mani](https://avatars.discourse-cdn.com/v4/letter/r/ea666f/32.png) [@Rashak\_Mani](https://boards.straightdope.com/u/Rashak_Mani)\ **Post date:** [March 17, 2004, 3:43pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/5 "2004-03-17T15:43:30Z")
The theory is that you lose menial and administrative jobs… and gain higher level ones. Not much consolation for the poor sod that doesn’t have a higher degree or specialization. The only weakness is that American Education isn’t making up for all the demand in these higher areas and imports brains. These brains might stay or leave… but they are not americans yet. Other americans get less jobs for sure. ``` The US needs to boost lower level education to make sure they don't disenfranchise poorer americans forever from the job market. ``` ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [March 17, 2004, 3:45pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/6 "2004-03-17T15:45:18Z")
Given the amount of foreign investment in the American stock market, and given the outsourcing phenomenon, at what point does an “American” company cease to be an American company in anything but name? ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [March 17, 2004, 3:45pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/7 "2004-03-17T15:45:20Z")
> [@](#): > > -lets companies focus on what they do best - designing, manufacturing and selling their products The company that laid me off sells information. They collect the information from U.S. companies, create programs to reformat it and to generate the product (i.e, reports) which they sell. In other words, the company “designs, manufactures and sells” information products. The design and “manufacture” of these products were programmed in-house. Now this is done by Tata. > [@](#): > > -will probably reduce layoffs because companies don’t have to hire for projects and then layoff. Should be “-will probably reduce layoffs because permanent employees can be replaced with temporary employees from offshore contractors.” Of course, they are no longer, strictly speaking, an American company. The company was sold to the English company GUS several years ago. Still, I believe that outsourcing led directly to me and many of my co-workers losing their situations. ---
**Author:** ![Binarydrone](https://avatars.discourse-cdn.com/v4/letter/b/3da27b/32.png) [@Binarydrone](https://boards.straightdope.com/u/Binarydrone)\ **Post date:** [March 17, 2004, 4:15pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/8 "2004-03-17T16:15:43Z")
The absolute best theory that I have heard to date (and I am not sure that I buy this) is that by making other countries more prosperous, you create new customers. There are things produced here (entertainment is a big one that comes to mind) for which there is a huge demand overseas. The theory is that by “lifting up” the economy of developing nations, you increase their ability to buy our products. Keep in mind that a lot of this seems to be from the perspective of the overall economy (i.e. a handful of rich dudes). Probably for the average schmoe the picture is less rosy. On the plus side (assuming that we are content to break a lot of eggs to make this omelet) Sooner or later it is conceivable that the Market will start running out of American consumers, as we will all be destitute, and will “correct” itself. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 17, 2004, 4:22pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/9 "2004-03-17T16:22:21Z")
It makes us stronger by making our economy more productive. If a company can now produce widgets for $10 per widget rather than $15 it frees up the other $5 for expanded production or other productive uses. This helps everybody who buys widgets, everyone who invests in widgets, and everyone whose products are bought with the extra $5. There is an economic law called the law of comparitive advantage. It means that to have the most productive economy everyone should do what they are best at. If the Indians are best at programming they should do that and free us up to do what we are best at. Think of it this way, at one time the vast majority of americans worked in agriculture. Since then technology has led to huge increases in agricultural productivity so that a much smaller percentage of americans now work on farms. Has this lead to massive unemployment? No, the people who would have been farmers now produce other things. The same thing will happen to people whose jobs have been outsourced, and it will benefit the vast majority of americans. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [March 17, 2004, 4:24pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/10 "2004-03-17T16:24:41Z")
I would say that anyone who says outsourcing makes America stronger is making an extraordinary claim. On the face of it, rendering more Americans’ unemployed and shipping money overseas in vast quantities makes America weaker. That’s just common sense. Anyone who says the opposite is happening is making an extraordinary claim. Extraordinary claims demand extraordinary proof. I haven’t seen anything LIKE extraordinary proof coming from the free marketers. Therefore, their claims can safely be ignored. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [March 17, 2004, 4:30pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/11 "2004-03-17T16:30:03Z")
> [@puddleglum](#): > > If a company can now produce widgets for $10 per widget rather than $15 it frees up the other $5 for expanded production or other productive uses. Such as huge executive salaries, for example? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [March 17, 2004, 4:31pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/12 "2004-03-17T16:31:12Z")
Firstly, there have been umpteen threads about this in the past few months, so I’m not sure what new ideas you want to debate in this one… But the fact is, outsourcing is a tool that companies use to reduce cost. It’s not different than automation, productivity improvement, or importing lower cost goods. Substitute any of those things into your OP, and ask yourself what the difference is. The only way you can prevent outsourcing (or offshoring) is to errect trade barriers around your country to prevent lower cost goods from being imported. Perhaps you might want to ask yourself instead, “what would a country look like \*\*without \*\* outsourcing”? [This article](http://www.mercurynews.com/mld/mercurynews/news/columnists/miguel_helft/8206487.htm) will give you a glimpse: > [@](#): > > It seems misguided to chastise Smith for quadrupling the size of his company’s software development team in Bangalore over the past 18 months, from six to 25, even though in the same period, Tasman’s Valley workforce grew by only five, to 55. > > Smith hopes to transform Tasman from startup to networking industry stalwart. He chose to hire in Bangalore for the same reason scores of other firms tap talented engineers around the world: Money for research and development is limited and skilled programmers there cost one-fifth of what they cost here. > > `On a dollar basis, I could only have hired five people here,'' Smith says. `But in reality, I probably wouldn’t have hired even five, because the project I needed to do needed 25 people.’’ ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [March 17, 2004, 4:36pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/13 "2004-03-17T16:36:33Z")
> [@Evil Captor](#): > > I would say that anyone who says outsourcing makes America stronger is making an extraordinary claim. On the face of it, rendering more Americans’ unemployed and shipping money overseas in vast quantities makes America weaker. That’s just common sense. Anyone who says the opposite is happening is making an extraordinary claim. I would say that anyone who says **importing cheaper goods** makes America stronger is making an extraordinary claim. On the face of it, rendering more Americans’ unemployed and shipping money overseas in vast quantities makes America weaker. That’s just common sense. Anyone who says the opposite is happening is making an extraordinary claim. Therefore, we should not allow the importation of any goods from outside the country that would result in selling those goods at a lower cost than could be done by domestic manufacturers. :rolleyes: ---
**Author:** ![Binarydrone](https://avatars.discourse-cdn.com/v4/letter/b/3da27b/32.png) [@Binarydrone](https://boards.straightdope.com/u/Binarydrone)\ **Post date:** [March 17, 2004, 4:42pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/14 "2004-03-17T16:42:32Z")
The problem that I have with these “Big Picture” economics it that while it may be true that the economy may be stronger at some future date, and that some theoretical average Joe will reap the benefits of this, it ignores the wreckage and misery that this causes in the short term. The other thing that is kind of irritating is that, although it is probably not intentional, big business is screwing the American worker from basically every angle. We are told that in order to be competitive, businesses must be allowed to outsource to countries where labor is cheaper, yet it seems to me that the reason that labor costs more here has a lot to do with the cost of living here (which it seems to me is influenced a lot by these very same companies). Hell, I would be glad to work for $3 a day, or whatever if that meant that I could be assured of keeping my job and would have a reasonable expectation of even a subsistence level existence. ---
**Author:** ![Binarydrone](https://avatars.discourse-cdn.com/v4/letter/b/3da27b/32.png) [@Binarydrone](https://boards.straightdope.com/u/Binarydrone)\ **Post date:** [March 17, 2004, 4:50pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/15 "2004-03-17T16:50:15Z")
> [@John Mace](#): > > I would say that anyone who says **importing cheaper goods** makes America stronger is making an extraordinary claim. On the face of it, rendering more Americans’ unemployed and shipping money overseas in vast quantities makes America weaker. That’s just common sense. Anyone who says the opposite is happening is making an extraordinary claim. > > Therefore, we should not allow the importation of any goods from outside the country that would result in selling those goods at a lower cost than could be done by domestic manufacturers. :rolleyes: I take it from the sarcastic tone that you are using here that you think that importing cheaper goods has, indeed, made America stronger. Would you care to elaborate? Bonus points for explaining how this is true not only from the big picture “Market” point of view, but is also true for all of the mill-workers and other manufacturing folks that are now not working. :rolleyes: indeed. ---
**Author:** ![maddhatter717](https://avatars.discourse-cdn.com/v4/letter/m/8edcca/32.png) [@maddhatter717](https://boards.straightdope.com/u/maddhatter717)\ **Post date:** [March 17, 2004, 4:53pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/16 "2004-03-17T16:53:07Z")
> [@John Mace](#): > > Firstly, there have been umpteen threads about this in the past few months, so I’m not sure what new ideas you want to debate in this one… > > But the fact is, outsourcing is a tool that companies use to reduce cost. It’s not different than automation, productivity improvement, or importing lower cost goods. Substitute any of those things into your OP, and ask yourself what the difference is. The only way you can prevent outsourcing (or offshoring) is to errect trade barriers around your country to prevent lower cost goods from being imported. > > Perhaps you might want to ask yourself instead, “what would a country look like \*\*without \*\* outsourcing”? [This article](http://www.mercurynews.com/mld/mercurynews/news/columnists/miguel_helft/8206487.htm) will give you a glimpse: Outsourcing promotes progress.A country without it would be slow to any advancement. It encourages people to be re- educated and trained for new jobs. It promotes leaders in technological change. Fortunately, America is one of these countries(among others)…and hopefully we will continue to lead the way (with others) instead off others leading it for us. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 17, 2004, 4:53pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/17 "2004-03-17T16:53:41Z")
If you want to live at a subsistence level in exchange for a lifetime job, I say good on you mate. I would rather live a middle class existence and have the prospect of a better future and if job uncertainty is the price I have to pay, then I will pay it. What those who take the “Small Picture” miss is that if you only look at the costs everything is bad and nothing will ever change. If you look at the “Big Picture” and see the benefits as well as the costs you get a more accurate view of the world. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [March 17, 2004, 5:02pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/18 "2004-03-17T17:02:25Z")
> [@Binarydrone](#): > > I take it from the sarcastic tone that you are using here that you think that importing cheaper goods has, indeed, made America stronger. Would you care to elaborate? I believe you are the one making the claim that these actions weaken the country. Why don’t you provide some cites from reputable economists that prove your point? I’d love to see it. > [@](#): > > Bonus points for explaining how this is true not only from the big picture “Market” point of view, but is also true for all of the mill-workers and other manufacturing folks that are now not working. :rolleyes: indeed. Leaving the sarcasm aside for the moment, I simply can’t conceive of a situation, short of walling off the country from the rest of the world, that you can prevent this sort of thing from happening. If you restrict companies in the US from using a cost cutting tool (and that’s all “offshoring” is), then you put US companies at a competitive disadvantage with companies in other countries. Where are your mill worers’ jobs then? What country is going to import higher priced goods from the US? Now, if you believe the US is better off as a closed economic system, without trade with the outside world, then you and I are operating on a completely different set of economic assumptions. At that point, it would be best for us simply to agree to disagree. ---
**Author:** ![Binarydrone](https://avatars.discourse-cdn.com/v4/letter/b/3da27b/32.png) [@Binarydrone](https://boards.straightdope.com/u/Binarydrone)\ **Post date:** [March 17, 2004, 5:08pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/19 "2004-03-17T17:08:40Z")
[QUOTE=John Mace] I believe you are the one making the claim that these actions weaken the country. Why don’t you provide some cites from reputable economists that prove your point? I’d love to see it…QUOTE] I must have missed where I made this claim, can you point it out for me? That being said, I guess that if we are going to operate economically at a global level, I am inclined to agree with you in that I don’t see a way to stop this from happening. That being said, I guess that what I would like would be for the folks that are advocating this to at least admit that they are hurting a lot of people, and take at least some harm reduction measures. ---
**Author:** ![Binarydrone](https://avatars.discourse-cdn.com/v4/letter/b/3da27b/32.png) [@Binarydrone](https://boards.straightdope.com/u/Binarydrone)\ **Post date:** [March 17, 2004, 5:17pm UTC](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846/20 "2004-03-17T17:17:22Z")
> [@puddleglum](#): > > If you want to live at a subsistence level in exchange for a lifetime job, I say good on you mate. I would rather live a middle class existence and have the prospect of a better future and if job uncertainty is the price I have to pay, then I will pay it. > What those who take the “Small Picture” miss is that if you only look at the costs everything is bad and nothing will ever change. If you look at the “Big Picture” and see the benefits as well as the costs you get a more accurate view of the world. I don’t necessarily have a problem with that. What I _do_ have a problem with is that so much of this debate seems more than willing to ignore the small picture. I will turn your argument around to you and state that what people looking at the big picture miss is that the small, individual, level of the economy is also important, and that only by also looking at it and factoring it in to your calculations can you get a true picture of what is happening. [Next page](https://boards.straightdope.com/t/how-exactly-does-outsourcing-make-us-stronger/234846.md?page=2)