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There are five basic groups of people who benefit from outsourcing:
First, entrepreneurs & business owners. These are people who want services or products so that they can better serve their customers (and thus make themselves more money!). These are men and women who are taking risks and trying to create something that other people want--and outsourcing helps them achieve their dreams.
The second group is the customers of these entrepreneurs & business owners. Outsourcing allows the companies to offer products (or higher quality products) that previously the business was not able to afford. Therefore, their customers are getting more and/or better products, at better prices.
The third group are the outsourcees--the employees in Argentina or India or wherever, who are actually doing the outsourced work. These are generally able, ambitious people for whom--by dint of being born into socialist economies--it is much harder to get even minimal jobs making minimal amounts in their own countries, whose governments severely limit economic opportunities (either by law or bureaucracy or other methods). The outsourced jobs, furthermore, almost always pay them more than the local job would--if the local job existed--so they have high salaries, by local standards, on jobs that wouldn't otherwise exist.
The fourth group is the government of the country in which the outsourcees live. They are benefitting from more tax revenue that they would not otherwise get, and the local economy also improves a result of the outsourcees spending their new money.
The fifth group are people like me: the middlemen and enablers who let this outsourcing happen. I don't deny that there's an element of self-interest to all this!
So, the natural question that follows is, who is harmed by this outsourcing?
I would say that almost no one is.
It could be argued--as I've heard it argued--that "the workers" are hurt. But it is always the case that oursoucing happens because the customers in an industry are not willing to pay the prices for the product that come as a result of the high wages for local workers. Therefore, without outsourcing, these jobs would be lost anyway (since the companies can not charge their customers the high prices needed to support the high wages, resulting in the local company not offering those services at all and thus those jobs being lost anyway). There are some jobs that are directly moved overseas and, in those cases, the same rational applies: the people fired are directly hurt, but they are being paid salaries that make the resulting products so high that their salary levels are unsustainable, no matter how you cut it.
There is a similar argument to be made about US government tax revenue. Well, I like the idea of giving the government as little money as possible (legally) so that it has as little to spend as possible! But the Reaganite in me aside, since the money moved offshore is often money that wouldn't otherwise be invested in such services here (by definition, since they are more expensive here), the money would otherwise be sitting in the bank (either the individual's or company's bank account, or the bank that didn't loan the money to the entrepreneur). The banks are, then, the biggest losers in the equation. But if the can fight back: if they offered us better interest rates, maybe our calculations would come to different conclusions! Banks indeed need the competition: their service is generally pretty bad, Wamu aside (they say). Moreover, the banks benefit very strongly from the economic growth & peace that result from outsourcing.
As the Argentines in my office would say, "win/win! win/win!".
I will discuss closely all of these issues in future blog entries, I'm sure.
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