Friedman on Outsourcing

Thomas Friedman gets one right:

I’ve been in India for only a few days and I am already thinking about reincarnation. In my next life, I want to be a demagogue.

Yes, I want to be able to huff and puff about complex issues — like outsourcing of jobs to India — without any reference to reality. Unfortunately, in this life, I’m stuck in the body of a reporter/columnist. So when I came to the 24/7 Customer call center in Bangalore to observe hundreds of Indian young people doing service jobs via long distance — answering the phones for U.S. firms, providing technical support for U.S. computer giants or selling credit cards for global banks — I was prepared to denounce the whole thing. “How can it be good for America to have all these Indians doing our white-collar jobs?” I asked 24/7’s founder, S. Nagarajan.

Well, he answered patiently, “look around this office.” All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke, because when it comes to drinking water in India, people want a trusted brand. On top of all this, says Mr. Nagarajan, 90 percent of the shares in 24/7 are owned by U.S. investors. This explains why, although the U.S. has lost some service jobs to India, total exports from U.S. companies to India have grown from $2.5 billion in 1990 to $4.1 billion in 2002. What goes around comes around, and also benefits Americans.

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[W]e must design the right public policies to keep America competitive in an increasingly networked world, where every company — Indian or American — will seek to assemble the best skills from around the globe. And we must cushion those Americans hurt by the outsourcing of their jobs. But let’s not be stupid and just start throwing up protectionist walls, in reaction to what seems to be happening on the surface. Because beneath the surface, what’s going around is also coming around. Even an Indian cartoon company isn’t just taking American jobs, it’s also making them.

FILED UNDER: Economics and Business
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. GP says:

    I think the outsourcing debate is over-blown and in large part being used as a political issue. Having said that, there are unknowns and issues that are prudent to contemplate:

    1. What obligation does a company have to its outsourced, American former employee? Should their be a requirement for the employer to provide severance and/or money for job retraining and job hunting?

    2. Friedman’s point is well taken (that for now the products used in India are mostly designed and made in America), but what if the outsourcing trend continues so that all of the products used in India are designed and made in India? Engineering is one of the biggest educational areas in places like India. How long before GM has all of it’s designers outside the US. The point is that just because an American company’s profits rise because of outsourcing, doesn’t mean the company will be using the funds to generate jobs in the US.

    3. Related to 2, what are the jobs most ripe for outsourcing in the future? Engineers, doctors and lawyers are most talked about. What else?

    4. What are the jobs that are least likely to be outsourced? People entering the job market, and those who have been outsourced should know this. What will be the secure jobs?

  2. John Lemon says:

    Damnit. I just drove my Lexus into an olive tree.

    (I think that is supposed to be profound, but I’m not sure how.)

    (I’m just glad to be commentator #319,019.