When does outsourcing, competitive advantages work and not work?
One thing that I don't like about outsourcing manufacturing, services,
etc. is the asymmetries involved here:
1. The C-level executives with the Board of Directors (~20 people)
decides the fate of hundreds, if not thousands. The consumers don't
get a big price break, and also, the employees have no say-so in this.
2. Another asymmetry is that the jobs can be shipped overseas, but
the employees can't. No Americans want to migrate to another nation.
The jobs can be shipped far more easily than the American human
being. However, the converse is not so true: An Indian or Chinese
would gladly come to a developed nation for work, whether it's farming
or something more value-added, like service-oriented work at an IT
Outsourcing/shipping jobs overseas will not work if: The destination
nation has worse worker's rights and environmental safeguards than the
corporation's host nation.
Finally, if the cost of outsourcing and all this talk about
competitive advantages is true, then why haven't the Americans seen a
corresponding drop in prices? The inflation rate is about the same as
it was prior to the age of outsourcing! Another words, even though
the goods/services are produced much more cheaply, the savings are not
passed off to the consumer. Moreover, the former employees also
didn't benefit. Only the Shareholders (i.e. C-level executives and
Board of Directors) benefited.
Please clarify your thoughts/opinions.
- posted 9 years ago