Blessed are the Geeks, for they shall internet the earth

IT Outsourcing... refuted
William Nett

There's an awful lot of conundrum going about these days with regard to companies outsourcing IT positions to overseas countries. The general consensus of IT professionals is nothing less than contempt, hatred, dismay, and fear. How is it, that a person with a six year degree who has spent thousands of dollars for their education gets tapped on the shoulder and introduced to a foreign national who may be taking his/her job in six to nine months? The simple answer is greed, but the complex answer involves a myriad of views from venture capitalists, macroeconomic analysts, and private investors.

Venture capitalists say that this is the way to go and it cannot be stopped. Indeed I'll agree, it can't be stopped, but should it be controlled? The colonials imposed a thing called a tariff tax in the 1800's, otherwise known as a 'duty tax' on imported and exported goods and services. Today, the US predominantly is a free trade country, and has been so for quite a few years. We've seen the impact on outsourced automobile manufacturing, but survived. We've seen the impact of outsourced pharmaceutical manufacturing, and still managed to survive.

Today, it's IT outsourcing... and its having quite an impact. In the US alone during the last three years, according to Reuters, 2.2 million jobs have been outsourced overseas. That means more profit for companies, but is it helping America? If the mean average income of those jobs was ~$40K a year, then that's approximately twenty six point four billion dollars in lost tax revenue a year to the federal government. Once more that's 2.2 million people needing unemployment assistance which roughly equates to roughly eighteen billion four hundred eighty thousand dollars assistance in six months... and I calculated this via California's unemployment benefits which is one of the lowest in the country. Compile this with medical and dental financial assistance... IT outsourcing isn't looking like such a good deal.

To the venture capitalists, the backlash may seem petty. Ok... so they now have to pay a little more for milk or butter. But for the average working person, they can no longer afford the extra condiment, they have to cut their cable TV, and their children can no longer join after school activities which cost money. This kind of reminds me of a childhood story called, "The little bug that went Achoo!"

CNN's writer David Kirkpatrick quotes Joe Schoendorf, a venture capitalist at Accel Partners, "If you had asked Americans in 1900 how they felt that almost all the farmers would lose their jobs over the coming century, they would have been just as outraged as today's workers are when they think about outsourcing." And they would be, but they still have their land to sell Joe, and they still have nearly a hundred years to learn a new skill... we're talking about people with no land, who have spent in excess of $30,000 American, and who will be obsolete in five to ten years... not one hundred, thanks to the non-regulation of outsourcing.

The ultimate end result is a single word if this problem is not solved, INFLATION. We will once again find ourselves on a lower rung of this 'macroeconomic' solution ladder. History has shown that any major financial influx to foreign countries costs us in the end. Yes, we pay cheaper prices for cars... because we have to. We buy cheaper generic drugs, because we have to. Compare the physical security of a 1965 Buick to a modern day Toyota. Compare the liability of foreign manufactured drugs to US pharmaceutical companies?

IT outsourcing is currently not a good idea... unless those companies are willing to put those profits back into the education of displaced employees who are just trying to get by and support their families... excuse me, someone just tapped me on the shoulder.

William M. Nett



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