Outsourcing jobs overseas is an all too common practice in corporate America, especially among the bigwig corporations. Even companies like IBM, Aegis, Hewitt, and Insigma, who we think of as being examples of American innovation and pioneering, are ranked as being some of the top businesses in the world for outsourcing to foreign countries.
Most of these outsourced jobs go to India and China, and many companies insist that outsourcing is not only financially beneficial to them, but helpful to the American economy by freeing up resources for further investment and job creation.
But what’s the truth about outsourcing, and is it really business-savvy to look to India and China for labor? Here are 3 myths regarding corporate outsourcing that may surprise you.
Myth #1: Outsourcing saves companies money so they can invest in American jobs.
Truth: Companies argue that with more money freed up by sending work overseas, they will be capable of investing in the U.S. market, thus helping the economy at home. However, the fact is there is no guarantee that a company will follow through on their promise. And even if they do, investing 5% of the profit back into the American workforce is still 95% less than what it would be if the company didn’t outsource.
Myth #2: Companies only outsource low-end jobs that shouldn’t be done by American workers anyways.
Truth: There is no limit to what kind of work a company can outsource, as long as it can be done online or over the phone. In fact, any job that is not specific to a particular location can potentially be outsourced. As Craig Barrett, the CEO of Intel, said in a New York Times report, “Unless you are a plumber, or perhaps a newspaper reporter, or one of these jobs which is geographically situated, you can be anywhere in the world and do just about any job.”
And unfortunately, low-skilled positions like call centers are not the only jobs being moved overseas. Engineering, IT consulting, research, and design positions are also increasingly leaving U.S. shores.
Myth #3: Companies only outsource when there is a lack of skilled workers here in America.
Truth: There is rarely a shortage of skilled workers in the U.S. Even during the recession, over 40% of American adults had the equivalent of a college degree – one of the highest percentages in the world. The truth is that companies find qualified workers in India and China who will do the job for practically nothing. Basically, it boils down to a question of lower cost, not availability of skill.
However companies try to justify outsourcing, the truth is they do so to cut costs, not to invest in the American workforce. But what these businesses fail to understand is that a weak economy at home means reduce profits in the long-term, so by sending jobs overseas they are becoming a cause of their own problem.
The smart move small businesses can make is to invest in American workers. And that’s the truth.
