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Outsourcing America: The True Cost of Shipping Jobs Overseas and What Can Be Done About It

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Outsourcing America is a book worth reading. Hopefully our policy makers and corporate leaders will read it as well. This book makes us think about the complex issues related to off shoring. It certainly makes us want to know more about the longer range effects of current policy.

Outsourcing America raises important questions. Why do we have tax incentives for those who off shore? Couldn't American companies achieve the same level of cost reduction if we did a better job of implementing lean manufacturing in U.S. facilities and save jobs at the same time? Doesn't off shoring put intellectual property at risk? Are we off shoring our innovation with respect to manufacturing methods? Is off shoring a quick fix for American companies that allows them to avoid dealing with more difficult changes necessary to achieve competitive advantage in a global economy? Are we capturing all of the costs associated with off shoring?

This book presents an excellent perspective on off shoring issues. What we need now is hard data, systematically gathered and without bias, to better understand the future effect of current practice and current policy on the U.S. economy and its job markets.

With so many vested interests involved in the debate, as detailed in the book, a study, without bias, will be difficult to achieve.

I have recently retired from a 38 year career working with people getting displaced from jobs. The Hiras description of what has been happening, especially in the last 5 years, is extremely accurate. Virtually everything I had read, heretofore, was solely on a macroeconomic basis. I kept wondering where are the studies about the people affected? Where are the analyses of all the other negative effects?

Outsourcing is not going away, but taking the overly optimistic approach used by so many simply doesn't cut it. In my observation, it only makes it worse. I have seen a very large number of people whose lives were permanently & negatively affected. The Hiras pointed out, accurately, that often retraining efforts are not successful, for a variety of reasons. But retraining coupled with a lot of preceding work with a knowledgeable employment counselor can be effective. But this is not a 'quickie' process. It does take some time. However, adequate time is not granted. I have seen training and reemployment funds steadily, often dramatically, reduced, often running out 3 - 5 months into the new fiscal year. Staffing for this type of assistance has been reduced to an absurd level.

Often, the best assistance to give to people in this situation is not retraining but just employment counseling, since the world of work as they knew it has changed so dramatically. A major reeducation process is needed as well as a serious self-assessment. A very large number of these folks had never known a day of unemployment in their lives, and felt blindsided, betrayed, angry. They had worked hard and well, were told by their employers that they were valued, played 'by the rules' (They thought. They didn't know that the game had changed, completely.), and were rewarded by getting laid off. And the way many employers dealt with these reductions only exacerbated their feelings, greatly.

I think the Hiras have managed to portray the type of problems that exist plus their scale and their ramifications. This is a problem on the same scale as the Industrial Revolution. But it is happening faster, more intensely, and is worldwide. For both political and economic reasons, it is not a problem that can be ignored or passed off as just another 'phase'.

There is probably not a topic that draws more emotional response in the information technology community than the offshoring of jobs. This change is not new in business as many people in the textile and manufacturing industries have lost their jobs to other countries, and this trend in IT is just the beginning of what is going to happen in all white collar professions in the coming years. Industry and politicians claim that displaced workers will find new careers and that this is good for the economy. But try telling that two people like my brother-in-law. He worked in textiles for 38 years and recently lost his job when his plant was shut down. With no pension and a difficult job market, what is he to do? And what happens when "astroturfing" type analyst reports are underwritten by industry?

It is the raw emotion of the polar ends of this debate, as well as the inherent appearance of bias, that seem to have driven Ron and Anil Hira to write "Outsourcing America" (AMACOM, 2005, 236 pages), in which they attempt to cut through the emotion to look at the real issues. It is clear that they went into this project with a clear bias, which is reinforced by having Lou Dobbs of CNN write the foreword. They also make some mistakes in their discussion of government contracting. Notwithstanding, they do succeed in identifying issues and implications for society as a whole that need to be clearly studied and discussed without emotion before a final judgement should be made.

Issues like offshoring are hard to discuss without emotion, but they are also hard to explain to the average person when couched in economic terms, so the authors do their best to make their points in a s straightforward a way as possible. However, they do tend to repeat themselves a few too many times. Where they are at their strongest is when identifying and talking about the long term impacts to communities as the result of diminished property tax revenues when high-paying jobs and the facilities that host these jobs are lost forever. Anybody who needs validation of this needs to do is look at what has happened in the Southern Tier of New York State as the result of IBM abandoning the place of its birth, taking 13,000+ jobs with them.

The authors also do a very good job of showing that there is no free lunch in free trade, that everything that is happening is the result of negotiations that always have winners and losers. That is why negotiation is often called the art of compromise. They also do a very good job documenting how the issue is being framed by industry and offshoring allies by funding so called "independent" reports on how good offshoring is for everybody. This needs to be discussed because it is certainly not being disclosed by the reports' sponsors.

However, their zeal to tell the story has resulted in sloppiness. In their discussions of U.S.Government Contracts, they say that the Section 8(a) program is the program that certifies businesses as small and disadvantaged. This is not correct. By definition, all 8(a) certified companies are small and disadvantaged, but not all small and disadvantaged businesses are 8(a). There is a distinction that the authors fail to distinguish or further explain. This makes this reader wonder if they were sloppy in other areas of their discussion as well.

If there is a lesson to take away from this book, it is that corporations are indeed making short-sighted decisions for their shareholders, but not necessarily for the common good. But there may not be any choice because the genie is out of the bottle, and the authors make their recommendations on policy changes that need to be made to address the issue.

Who Should Read This Book

This book should be read by anybody that has an opinion on offshoring, or at least thinks they do. You may choose to agree or disagree with the authors, but the content should at least make you think deeper about the issue.

Scorecard

Par on a Short Par 5 that should have been reached in two (their obvious viewpoint and mistake that I identified forced them to get up and down in 2 from the greenside bunker).

If you are involved or concerned about outsourcing and use of guest worker VISAs, this book is for you. If you have no idea what the outsourcing fuss is all about, this book is for you too!

Ron Hira bursts through the myths and propaganda on outsourcing with verifiable statistics and detailed analysis. Just a few gems are the exposure of venture capitalists demanding that startups offshore outsource in order to receive funding, long term economic implications if outsourcing and use of guest worker VISAs are not addressed, "expert" studies promoting outsourcing exposed as being based on faulty data and assumptions, and the true reasons corporations are moving jobs offshore. Hira & Hira also give policy recommendations and a list of legislation introduced at the federal level.

A major highlight of this text is the use of detailed references. Every chapter lists a series of expert studies for further reading. Yet, the book is written as a fast read, without the typical academic dryness one would expert from a public policy expert.

Absolutely a must read for anyone who wants unvarnished and factual information on the state of offshore outsourcing in the United States.

So where have all the good jobs gone. As most know, the blue-collar ones shipped off in the 80's to low-wage economies, such as Mexico and South Korea. No one on high said much at the time, the idea being that uppity manufacturing unions were finally getting a deserved take-down, at the same time few bothered to look at bombed-out venues like Michael Moore's Flint, Michigan. But now it's white-collar jobs being outsourced, and in record numbers. Now some of these same remote elites are starting to sound alarmed as the job razor shaves ever closer to home.

The Hiras' book reflects some of this attitude. Above all, it's a gentlemanly indictment of a disastrous economic policy that has been hollowing out the country faster than Ross Perot's "giant sucking sound" from 1992. It's really a rather tepid account of what many Americans already know: that outsourcing is not good for America. Not only does outsourcing trade good jobs for bad ones (if you can get one at all), it undermines families, communities, the economy generally, and, most ominously, destroys purchasing power, the engine of modern growth. But the question whether a Walmart on every block is worth that cost is never really asked.

I would have liked the book better had it dug a little deeper into the financial forces driving the current race to the bottom, or had done a better job of spotlighting just who's benefiting from the rip-off. As it stands the book works well enough as a talking-points primer, but not much beyond that. The ten suggested reforms are all conventional enough, seeking more to ease the problem more than remedy it. Perhaps the moderate wing of the Democrat Party might give them a listen. Above all, the book is a nice safe token of respectable dissent, suggesting that even conservative policy-makers are having second thoughts on what a Third World America might look like, or more importantly, act like. I just wish this were the kind of work that kept them awake at night.

The book is an excellent read, well-organized, and easy to follow. The style is unique - every issue is discussed from different angles. The authors challenge the readers to learn and discuss the growing phenomena of outsourcing. Outsourcing is complex and has evolved in its current forms due to multiple, interrelated factors.

Some other reviewers have personalized the issue and the authors do the opposite; they ask all Americans, and especially those in positions of power, to push for more research and debate. The Hiras' directly acknowledge the issue is not easily examined and the causes and effects of outsourcing are not singular and evenly distributed. The authors do provide some of their own explanations and prescriptions but with the cavaeat that the debate is not ended by them. In this regard, they are not pretentious - unlike some of the reviewers and other authors that personalize the issue or have a particular agenda without even trying to be objective.

In fact, a significant part of the book is about the debate itself. Outsourcing is an emotionally-charged, politicized, and contentious issue. As identified in the book, there seems to a clear lack of debate itself and those directly involved the debate (from all sides) are selectively framing the issue. Corporations and some economists argue that change is inevitable and outsourcing can be managed so that job losses are short-term. The Hiras' challenge this argument by pointing out that these losses are not temporary and how outsourcing partly leads to the loss of technological innovation and competitiveness in the United States. Politicians have downplayed the negative aspects of outsourcing and experts advising them have provided biased information on the extent of outsourcing and its effects. Even the fourth sector, the media, has gone along with the arguments of those supporting outsourcing.

The Hiras' suggest that those most directly impacted by outsourcing, American workers and citizens, have been the least represented in the debate. They do not ask that outsourcing be eliminated, but managed with particular care to help workers and communities disproportionately impacted from the effects of outsourcing.

America is in denial over this issue. The Hiras' hope to jumpstart an important debate crucial to America's future. The transition to a service sector economy with the loss of manufacturing jobs was painful, but the speed by which job losses in some service sector industries is occurring requires research and debate. Outsourcing America moves toward those ends.

The new, revised expanded edition of Ron Hira and Anil Hira's OUTSOURCING AMERICA exposes how the trend affects us all, linking outsourcing efforts to economic shifts towards globalism and how it affects immigration policies and job security. From the policies counties use to attract US employers to how individuals can avoid becoming an outsourcing victim, OUTSOURCING AMERICA: THE TRUE COST OF SHIPPING JOBS OVERSEAS AND WHAT CAN BE DONE ABOUT IT is an excellent pick business collections need.

University of California experts estimate that about one out of nine jobs are vulnerable to outsourcing, while others see half of jobs outsourced as paying over $31,700/year, and a total of $151 billion outsourced by 2015. Clearly a serious problem!

Some dismiss the problem, saying that this allows the U.S. to focus on higher-value R&D. However, that is patent nonsense - is everyone going to become a scientist? Regardless, China already is the #2 producer of scientific papers on nanotechnology - a key new area.

Others say "new jobs" will occur, but are vague as to where these jobs will be or come from. Others claim that "insourcing" largely offsets outsourcing - however, further examination shows that much of what they are counting simply represents foreign- firms' takover of former U.S. firms. An example is Daimler-Benz and its Chrysler takeover, another is Tyco moving its headquarters offshore to avoid paying U.S. taxes.

Reality is that the problem is likely create economies of scale advantages for foreign producers as they claim more and more of former U.S. production. In addition, some firms are sending design and production engineering overseas to be closer to the action. (Neither point was made in Hira and Hira's book.)

Another problem is "insourcing" via H-1B and L-1 guest-worker visas allowing eg. Indian citizens to come to live in the U.S. and take jobs away from Americans.

Correcting the problem will require changing U.S. laws that provide no penalty for offshoring and offer tax deferrments for doing so (taxes on profits made overseas can be deferred; many firms are trying to also get a "tax holiday" on these deferred taxes). It will also require lowering U.S. corporate tax rates - data shown in the book indicates that U.S. firm tax rates are about double that of most competitors. Still another requirement is tightening visa requirements that allow foreigners in to take our jobs. The first requirement, however, is that outsourcing be recognized as a problem - unfortunately, most politicians are still reading outdated Economic textbooks and think our economy is improved by outsourcing.

The book is a start, but we need more data and credible analyses from insightful economists. It also isn't clear whether the current data include manufacturing jobs already lost, or just new service jobs. Finally, the impact of illegal Mexicans also needs to be addressed in the same book.

Read this brilliantly written book and understand how the corrupt robber baron corporations are forcing the United States into third world status, indentured servitude and debt slavery! How they spin expensive bogus studies meant to hypnotize folks into really believing decent new jobs are being created. We all know the greedy fat cats are selling us down the river while filling our politician's pockets. What happen's when your great career is stolen and handed over to foreigners, both here and abroad? Who will be paying taxes when the best job is fast food service? The elite tell us to eat cake!" We're not gonna take it anymore!

This book contained great information and I am sure the government and the corporations mentioned in the book didn't want you to know. I used this book as a basis for a graduate paper I wrote on Offshore outsourcing. Thorough reference section and lots of facts and statistics. You will be surprised that various government organizations use tax payer monies to pay foreign workers.

If you are wondering why America is in the position we are in now - read this book. It is not Terrorism that is responsible for the economy, it is corporate greed. Gordon Gecko's (Wall Street, 1987) mantra was "Greed is Good" and the ethics of corporate America haven't changed.