Outsourcing: The good and the bad

BusinessWeek has an article on outsourcing that has some useful insights in it. The good: Outsourcing does not always save time or money. As many of knew when the outsourcing craze began to heat up, it is a lot of work to manage workers on the other side of the world who are 10 or 12 hours out of sync with your own office hours. In India, where IT outsourcing has helped fuel the economy, rapidly rising salaries and very high turnover (often above 50% a year) is driving U.S. businesses away. Some of that work is coming back to the United States, and there are opportunities in low cost of living rural areas to capitalize--if you have a tech-savvy workforce and affordable broadband.

The bad news is that even though some outsourcing is moving out of India, some jobs are being moved to other low wage countries. What that means for the U.S. is that IT salaries are flat, and are likely to stay flat for some time. But I have maintained that many IT jobs have been priced too high for years--an artifact of the rapid growth in IT in the nineties. Some adjustments are not necessarily bad. But overall, we are in a world economy, like it or not, and your community is competing with other countries, not just the next county or the next state. And no matter how much local leaders may not see that or deny it, it is a fact. Every community in America has to be looking over its shoulder at the world economy now. We aren't in Kansas anymore.

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