|
|
|
 |
|
Home / Washington Business - May/June 2004 / Outsourcing Can Be a Tool for Economic Development |
|
|
|
 |
|
|
|
Outsourcing Can Be a Tool for Economic Development |
|
|
|
Written On: May/June 2004 |
|
|
|
Written By: by Alexis Nepomuceno |
|
|
|
Ignorance surrounding the issue of outsourcing is running more rampant than ever.
An extreme example was displayed by the IBM labor union “Alliance@IBM” who displayed signs such as “Export executive traitors, not US jobs” at the company’s annual shareholders meeting in Providence, Rhode Island. Ironically, the true traitors of the event were the union rally participants who were essentially protesting capitalism and free markets — the very elements that created their jobs in the first place. Jobs being “imported” into the United States are coming in at a faster rate than they are going out.
Outsourcing is a means for efficiency and getting more output at a lower cost, thus leading to lower prices for consumers and companies. Historically, lower prices have meant more jobs and a better standard of living.
Based on research from the Organization for International Investment, the numbers of manufacturing jobs brought into the U.S. grew by 82 percent, while the number of jobs “exported” grew by only 23 percent. These findings also revealed that the new “imported” jobs are often higher-paying than those outsourced.
It can be argued that the media-hyped moniker of “outsourcing” can actually become a foundation for economic development. Washington state is particularly well-positioned to take advantage of the benefits of outsourcing because of its strong ties to Asian countries.
A historical reference is Japan’s emergence in the world economy and the growing pains it caused in the U.S. with short-term layoffs and the “Buy American” campaigns of the 1980’s. Japan’s growth and its ongoing investments and trade relations with the U.S. can be compared with the major role that countries like China already play in the state’s economic well-being.
Washington state businesses already export a significant amount of commodities to China. According to the U.S. Customs Bureau, 2003 commodity exports from Washington totaled more than $3.2 billion, which is more than twice as much as the $1.5 billion exported in 1996. Despite these staggering numbers, policymakers usually only refer to one side of the equation — “exporting jobs.” As China’s economy grows, so will its need for goods and services from the U.S. Outsourcing is just another form of trade, yet many people forget this.
China isn’t the only example of the state and U.S. benefiting from favorable trends abated by outsourcing. Exports from the U.S. to India increased from $2.5 billion in 1990 to $4.1 billion in 2002. In Washington state, more than $800 million in goods have been exported to India from 2001 through 2003.
The U.S. is one of the world’s greatest benefactors of “outsourcing,” as 6.5 million workers in the country are currently employed by foreign companies. In fact, “global outsourcing” created 90,000 more jobs in the U.S. than was sent out, according to a study released by the Information Technology Association of America (ITAA). The study credits cost savings that have resulted from global outsourcing for the net gains in employment. Further validating net gains in employment, the Bureau of Labor Statistics predicts that there will be more than 22 million new jobs created in the U.S. between 2000 and 2010.
Outsourcing can be a foundation for Washington companies’ ability to compete globally. If companies can’t shift some work abroad, they will become less competitive against companies based in countries without such restrictions. In order for economic development efforts to succeed, policymakers must pay less attention to the myths and misconceptions, and focus more on the history and the facts.
|
|
|
|
|
 |
|
