If there’s one word that is commonly associated with greed (apart, maybe, from corporations and capitalism), it’s outsourcing. The very mention of outsourcing—particularly when it involves hiring workers outside the U.S.—is enough to throw some people (particularly politicians) into a conniption fit. Outsourcing of manufacturing jobs is probably the most recognizable case; IT jobs, however, have also been outsourced extensively. But when you get down to brass tacks, is outsourcing really a problem? And if so, what are the potential, and desirable, solutions?
Outsourcing Overseas, Outsourcing at Home
Many companies have outsourced in recent years, sending U.S.-based jobs overseas. We’ll skip the numbers, which are usually estimates that have a number of built-in assumptions, and simply assume that indeed, many jobs have been outsourced, and the trend will continue. Let’s instead try to break down exactly what the problem with outsourcing is. Although the focus here is primarily outsourcing of IT jobs, the same reasoning can apply to any industry.
Outsourcing generally has the connotation of involving a transfer of jobs from one country to another: in particular, from the U.S. to other nations (often, China or another Asian nation). But consider more “local” outsourcing. First, note that one of the driving forces behind today’s economy is the division of labor: individuals specialize in particular tasks, and the efforts of these individuals are aggregated to create products. Thus, some people or companies create software, others create microchips, yet others design display screens and still others create plastic cases and other parts. When all these efforts are combined, the result is a mobile phone. One company (or individual) could conceivably perform all these tasks, but this would be extremely inefficient and expensive. Furthermore, a single individual (person or company) would probably lack all the requisite talent to do all these jobs well. So, let’s say a company wants to make cell phones—that company will outsource certain tasks (probably most of the ones listed above), and will just combine the parts into a product to sell.