Michael Bean has an interesting piece on why outsourcing isn’t a smart long-term strategy for businesses. I’ve long argued that outsourcing doesn’t work and companies who outsource high-tech jobs to cheaper overseas workers don’t see the advantages that lower labor costs are supposed to provide. With Dell already pulling away from Indian call centers, it’s clear that the backlash is beginning.
The problem is that the cost of labor in this country isn’t the issue – the real costs are in the expected bonuses like health care coverage and insurance. Health care coverage is ridiculously expensive due to the high cost of malpractice insurance and increased regulatory costs. The best way of reducing employer costs and boosting employment even more is by eliminating frivolous lawsuits through tort reform and streamlining unnecessary regulatory processes. Even if the savings only amounts to a few percent per year, for many businesses that means bigger employee bonuses and more opportunities for new jobs.
In the end however, outsourcing is only an issue in a down economy. As the economy grows, the amount of expansion does as well, providing new opportunities for all. Creating a strong economy will do far more to keep American workers employed then protectionist measures which only shift the burden from one group of workers to another – usually with disastrous results.