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I Outsourced Jobs To Foreign WorkersI Outsourced Jobs To Foreign Workers
By [Garnet R. Chaney]
Back to Foreign Job Outsourcing ... Or Garnet's Interesting Articles
I have mixed feelings about this job outsourcing. I have certainly been personally responsible for job outsourcing to Eastern Europe back when the dot-com craze made it prohibitively expensive to hire programmers near Silicon Valley. Since the last dot com I was working for went out of business, I've been dying to come up with more things to outsource. I think the basic economics are something like this:
If you found something you could do totally online, from home or anywhere in the world, something you could spend a whole month doing, and that would earn you $1000 a month, wouldn't that be great? Not for California it wouldn't, not if it was a full time job! It would be a dismal failure, you couldn't live on that here.... But imagine, if you paid someone in Bulgaria, $200 a month, to sit at their computer all month doing that same task for you, so you could recieve the $1000. Wow! That would be a great success. Give me 10 such people, then I'd have the $8000 a month I'd need to keep up with the Jones here, and those 10 people in Bulgaria would each be making about twice what their neighbors are making each month, so they'd be happy too. Actually, I'd have to pay them about $400 a month each so they could have a really good standard of living, but what do I care, I'd still have a 60% gross profit margin. It would still be a fabulous success to have 10 such people working for me.
I've been telling people about this for years. New York Times must have recently heard what I was saying. Last Sunday they profiled a customer service representative in Bangalore India who was able to have money for rent, mobile phone, restaurants, new clothes, and money to send to her family, on a salary of only $400 a month.
The thought of hiring workers in California's legal, social, and regulatory environment is frightening. I would not go into business to be a part of California's social experiment, to provide welfare for local workers. All the layers of bureacracy and regulation concerning hiring of workers is very frightening. Posters concerning laws from EEOC, FTB, IRS, OSHA, and more, must grace your walls. If I'm in business, I'm in business to make a profit. And there is not much I can think of to have someone do online here that can make the $10,000 a month I'd need to pay for the salary, taxes, workers compensation insurance, employment law advice, etc., to take care of someone here. (If I did know of something like that, I'd be doing it myself.) But I can think of all kinds of ways to turn a full month of online labor into $1000 or $2000 a month. I can think up three of those ideas a week.
Greenspan and friends say that they aren't sure what kinds of jobs will rescue the Americans. Greenspan and many other economists say they firmly believe there will be new jobs eventually, even if it's nearly impossible right now to predict what those new jobs will be.
Last Friday, February 19, 2004, Greenspan said "The capacity of workers, after being displaced, to find a new job that will eventually provide nearly comparable pay most often depends on the general knowledge of the worker and the ability of that individual to learn new skills."
The reality is that if the global economy does not raise demand to use up this huge supply of workers, then the price of labor will fall, regardless of education.
Robert Brusca, chief economist at Native American Securities in New York, says "There are so many low-paid people who are educated that education is simply no the answer." Paul Kasriel, chief economist at Northern Trust in Chicago adds, "Do you have to be reeducated? Maybe not - maybe you just need to accept a lower wage rate."
And with the quickening pace of globalization, it's almost impossible for traditional colleges and universities to keep up. Hence the crop of specialty schools trying to teach new dot-com job skills. Hopefully students can learn them from such a school before the school goes out of business.
Federal Reserve Chairman Alan Greenspan [said] on Monday February 22, 2004, that U.S. consumers seemed in generally good financial shape, able to carry more debt comfortably because they are cushioned by rising home prices.
Doesn't he realize that home prices are driven by wages and salaries, as much as they are driven by artificially low interest rates that allow people to qualify for much bigger mortgages than they used to? How much longer will the home prices be able to rise if more American workers are forced to adjust to lower wages? Or if they can't even figure out what kind of job to train themselves for next?
See also Garnet 's thoughts about some of the latest news, and also the articles February 2004 Gas Price Resistance , Independent Gas Stations , Foreign Job Outsourcing , [College Contrarian Viewpoint]...
More thoughts about offshoring:
LITTLE ROCK, Ark. – While Democrat presidential candidates complain that too many jobs are going overseas, the last Democrat to hold the office is having a Scottish firm build nearly $1 million worth of cabinets for his presidential library.
Bulgarians have an aversion to 'unnecessary bureaucracy'.
"For example when we asked the developers to fill in time sheets we got back the response that they would rather kill their mothers than fill in time sheets!"
"Attitudes towards team working in Bulgaria can be summed up by the following Bulgarian saying: one Bulgarian is better then ten Germans, but one German is better then ten Bulgarians."
"One interesting thing we realized was that young programmers want to be Ninjas, they want exciting work, they want to go out and kill people, in other words they thrive on high risk, innovation and acts of heroism."
"As a company we needed farmers, we needed people who would do steady, boring work according to fairly precise specifications and asking Ninjas to be farmers tends to generate a lot of frustration!"
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