Another View of Offshoring

Bill Hackos
Vice President, Comtech Services, Inc.
bill.hackos@comtech-serv.com
www.comtech-serv.com

McKinsey and Company has been doing lots of consulting related to offshoring. They help large companies move to offshore outsourcing. This abstract, “Who wins in offshoring?”, is from an unsigned article from the McKinsey Quarterly to the CNET Web site, http://news.com.com/2030-7341-5096283.html, dated October 26, 2003.

McKinsey reports that as of July 2003, about 400,000 business-processing (IT) jobs have been lost to offshoring. That number will continue to increase by 30 to 40 percent annually. By 2015, 3.3 million IT jobs will have been moved abroad. It’s not clear from the article if these numbers include hardware and software manufacturing, where most technical writers work.

The article is very supportive of offshore outsourcing because it brings greater profits to large companies who use offshoring. McKinsey’s argument is that more money comes to American companies in profit than leaves in salaries. While they are sympathetic to the job losses in the United States, they explain that there has always been economic restructuring and that this is just another example. After all, 70 percent of jobs in the United States are in service industries that can’t be moved abroad, such as retailing, catering, and personal care. So if you lose your technical writing job, you could always work at McDonald’s, Walmart, or at a beauty salon or nursing home and be confident that your job would be safe from offshoring.

McKinsey reports in the article that from 1979 to 1999, 69 percent of people who lost jobs as a result of cheap imports, other than manufacturing, were reemployed with a mean wage of 96.2 percent of their previous wage. Of course, most technical writers are employed in manufacturing. McKinsey fails to note that in the late 90s the United States had the best economy in the history. Even so, 31 percent were not able to become fully re-employed. They are silent about statistics from 2000 to 2003 when we are in de facto recession.

They point out that the money flowing out to the offshoring sites is increasing wealth there, providing even more profit for large American companies. There is no mention of losses in the American market.

McKinsey doesn’t address the issue of quality of work or the amount of onshore editing that has to be done to fix offshore programming or writing. Their only comment is that “offshore services are identical to those they replace” and “offshore workers, enjoying higher-than-usual wages, tend to be motivated.”

 

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