Outsourcing – Bad for the economy?

There has been an overwhelming response to last week’s article “Indian Call Centers – Bad for business?”  coming from positions for and against outsourcing.  Quite a few have said that any type of outsourcing is bad for a countries economy.  I totally disagree with that; does outsourcing call center services, programming and engineering by Indian or other foreign companies take away jobs and money from the U.S.?  It’s not a cut and dry yes or no answer.

Consider the following:

There are 13 Toyota plants in the United States and counting dealership employees and indirect jobs Toyota is responsible for 192,000 jobs in the United States plus they purchase parts from 500 U.S. suppliers resulting in millions of dollars in income for those companies. There are more than 367,000 private sector jobs and $17 billion in annual wages and salaries, generated as a result of Honda’s total U.S. operations and Mitsubishi has more than 5000 authorized and independent Mitsubishi dealers and employs over 15,000 people in the U.S. in retail sales, parts, and service. Nissan is responsible for over 180,000 jobs and Mazda has over 60,000 employees and according to research done in 2008 foreign companies have helped revitalize forgotten towns and have added millions of jobs to the U.S. economy and pay on average substantially more than U.S. companies do (Remaking the  American Dream), and according to research done this year, foreign direct investment (FDI) in the U.S. has jumped by 82% from $179 billion to over $325 billion resulting in 5.3 million American Jobs.

Globalization is not going to happen, it’s already here, it’s occurring right now, and while many may think it is a bad thing, it’s really not; it opens up doors of opportunity, especially for the small business which is 80% of U.S. companies, which simply did not exist in the past.  Sure jobs are lost in one area, but others are created somewhere else.  This has happened throughout history, in many different ways.  During the industrial revolution people complained that machines were taking the place of humans, and they were, do you really want to go back to doing everything by hand?  This isn’t any different, we have to adapt and we have to realize that we don’t live on this planet by ourselves and that global business is a good thing, not a bad thing.

Does this mean as Americans we should forget about manufacturing our own products or that we are going to be completely dependent on other countries?  Absolutely not.    In the past, we manufactured products in American to be sold to Americans.  Today, we manufacture products in America, to be sold not only to Americans, but to foreign nations, and those nations manufacture products that are sold in America.   In some cases the trade off with other countries is lopsided and that is something our government needs to address, but globalization in business as a whole is not a bad thing.  It is the future and we must adapt just as we have to other changes throughout our history.