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When it comes to outsourcing, I think there may be a number of valid concerns, which is why I don't see it as a no-brainer, even if there is a big discount:
Quality of staff knowledge, training and skills
Convenience and frequency of communication
Quality of communication
Trust among team members. coordination and teamwork
Buy-in, dedication, commitment
Some of these things can be an issue even if you're outsourcing to a company located in the same city, let alone halfway around the world. There can be dysfunction even within a company of course, but I am saying that I think the risks for issues there is greater when outsourcing.
Most of the conversation is largely been about Western countries outsourcing things to Asia. I was on the receiving end of being bought out by European company which ultimately led to lower starting pay. At first they said there be no real change but the reality is because you had the dollar versus the Euro. there was a slide in the value of the dollar meant that last money and profit coming back was less. A little bit up some 80s trivia care but way back in the day when they were making the DeLorean Company they chose Belfast Northern Ireland instead of Puerto Rico to make the car. The original name of the car was 12500. The car was supposed to cost $12,500. But when the pound made an adjustment they had to raise the price of a vehicle by 50%. Have they made the car in Puerto Rico instead of Belfast there's a good chance the car company would have lasted longer.
When it comes to outsourcing, I think there may be a number of valid concerns, which is why I don't see it as a no-brainer, even if there is a big discount:
Quality of staff knowledge, training and skills
Convenience and frequency of communication
Quality of communication
Trust among team members. coordination and teamwork
Buy-in, dedication, commitment
Some of these things can be an issue even if you're outsourcing to a company located in the same city, let alone halfway around the world. There can be dysfunction even within a company of course, but I am saying that I think the risks for issues there is greater when outsourcing.
There are things to consider, but these become increasingly easy choices to make when significant portions of your local workforce has suddenly decided for themselves that they believe they should get more amenities and/or full-time WFH positions, despite these same workers working on your terms at the same job not 2 years prior. If that outsourced labor is 80% as good and half as expensive, the cost/benefit ratio tips rather quickly to the benefit of outsourcing.
Autoworker jobs would have eventually faded into the sunset, but the American autoworker demanding the benefits they did was a huge catalyst in both the acceleration of jobs out of this country and the acceleration of automation. The American office worker would do well not to make the same mistakes.
There are things to consider, but these become increasingly easy choices to make when significant portions of your local workforce has suddenly decided for themselves that they believe they should get more amenities and/or full-time WFH positions, despite these same workers working on your terms at the same job not 2 years prior. If that outsourced labor is 80% as good and half as expensive, the cost/benefit ratio tips rather quickly to the benefit of outsourcing.
Autoworker jobs would have eventually faded into the sunset, but the American autoworker demanding the benefits they did was a huge catalyst in both the acceleration of jobs out of this country and the acceleration of automation. The American office worker would do well not to make the same mistakes.
It's an interesting argument. Unions generally work better in closed environments. There are strikes that happened back in the day that would have not nearly the same impact today. For example the early 1970s had a postal strike. The results it went from the Post Office to Postal Service. Sounds like semantics but it did mean fair difference. https://en.wikipedia.org/wiki/U.S._p...strike_of_1970
The real reason why the strike also worked was pretty simple....social security. Until it was a direct deposit tens of millions of live checks went in the US mail monthly. A postal strike would deprive tens of millions of retirees their income within weeks. Now it's a direct deposit so it's moot.
The labor force isn't exactly growing in the US. Retirees, lack of immigration and lack of birthrate add up. There's a difference between someone saying "I can do your job" to "I have the time and want to do your job".
You also have to consider what stakeholders might see. If business partners, suppliers, and competitors don't like it they might want to change things. Social media has quite a bit of cancel culture and that's a whole subject to itself. If a company is public shareholder activism does exist, I've seen it in my proxy statements. The other issue is what if the outsourced area realizes how much less they are paid and they demand more? When i was in retail on a smaller scale we sent a crew to NY. They were pretty pissed because off of ours made 10-15% less. Remember the Market Basket protest/strike? Most strikes are against leadership, not for it. Of course the other thing is it's not like it's one company going overseas there's plenty there. So you are competition for everyone else. Wages in China have doubled since 2012 https://tradingeconomics.com/china/wages
In USD that's about $14,500. Clearly not the 10 cents an hour or $1/hr that some think. That's also not counting taxes and regulations either. So wages doubled in eight years without any major union movement. Show me a union anywhere in any history that caused that to ever happen in such a scale. Men in china retire at 60 and women at 50 so there's a general limit and also aging there as well. If this doubles again in eight years it will be $14 still a low wage by western standards but beyond the US minimum wage. China isn't nearly as cheap as what it once was.
It's an interesting argument. Unions generally work better in closed environments. There are strikes that happened back in the day that would have not nearly the same impact today. For example the early 1970s had a postal strike. The results it went from the Post Office to Postal Service. Sounds like semantics but it did mean fair difference. https://en.wikipedia.org/wiki/U.S._p...strike_of_1970
The real reason why the strike also worked was pretty simple....social security. Until it was a direct deposit tens of millions of live checks went in the US mail monthly. A postal strike would deprive tens of millions of retirees their income within weeks. Now it's a direct deposit so it's moot.
The labor force isn't exactly growing in the US. Retirees, lack of immigration and lack of birthrate add up. There's a difference between someone saying "I can do your job" to "I have the time and want to do your job".
You also have to consider what stakeholders might see. If business partners, suppliers, and competitors don't like it they might want to change things. Social media has quite a bit of cancel culture and that's a whole subject to itself. If a company is public shareholder activism does exist, I've seen it in my proxy statements. The other issue is what if the outsourced area realizes how much less they are paid and they demand more? When i was in retail on a smaller scale we sent a crew to NY. They were pretty pissed because off of ours made 10-15% less. Remember the Market Basket protest/strike? Most strikes are against leadership, not for it. Of course the other thing is it's not like it's one company going overseas there's plenty there. So you are competition for everyone else. Wages in China have doubled since 2012 https://tradingeconomics.com/china/wages
In USD that's about $14,500. Clearly not the 10 cents an hour or $1/hr that some think. That's also not counting taxes and regulations either. So wages doubled in eight years without any major union movement. Show me a union anywhere in any history that caused that to ever happen in such a scale. Men in china retire at 60 and women at 50 so there's a general limit and also aging there as well. If this doubles again in eight years it will be $14 still a low wage by western standards but beyond the US minimum wage. China isn't nearly as cheap as what it once was.
The businesses at play have also changed in that time. Something going for workers in a war with a public company that makes its bread and butter off the consumer directly are going to be more susceptible to sways in public opinion. If enough people say enough with buying brand X of car because they shipped jobs overseas, the shareholders may take notice. But, at least around here, there's a lot of corporations that sell to other corporations. How many of us work for a company whose products are something we may use indirectly but are not something we buy or really even have control over when/where it's used? The public can put the screws to a Facebook that relies on the public to generate revenue, but they're not going to be nearly as effective at boycotting a company like Oracle.
There's also a bit of a second gilded age today in that some companies are or are nearly oligopolies. I have heard more than one C-level make comments tantamount to "I don't care if they don't like us or our models. We make the best _____ in the world, so they're going to buy our product either way to remain competitive in their field." Nobody seriously believes an AT&T or Comcast gives a rat's *** that their service or image sucks because if you're in one of their many monopolized markets, you're a captive customer.
There are things to consider, but these become increasingly easy choices to make when significant portions of your local workforce has suddenly decided for themselves that they believe they should get more amenities and/or full-time WFH positions, despite these same workers working on your terms at the same job not 2 years prior. If that outsourced labor is 80% as good and half as expensive, the cost/benefit ratio tips rather quickly to the benefit of outsourcing.
Autoworker jobs would have eventually faded into the sunset, but the American autoworker demanding the benefits they did was a huge catalyst in both the acceleration of jobs out of this country and the acceleration of automation. The American office worker would do well not to make the same mistakes.
I've seen exactly this happen up close in a medium sized business. Not one you'd expect to pursue this sort of thing either. Without getting into specifics the domestic based staff was always 50/50 in terms of quality. 50% were good employees that you'd want to hold onto, and the other 50% had a litney of issues that prevented them being full contributors in the same way a normal decent employee would be.
Bad attitudes, low motivation, poor follow through, would quit on a whim or commit fireable offenses. The managers and overall environment wasn't the issue. These sorts of problems had been evident 20 years running, but there wasn't really an alternative to it.
Because the pandemic caused staff to be remote the owners started to seriously consider outsourcing and moved fast. Domestic staff was cut in half and three times that amount was hired overseas. So the work force doubled but labor costs went down by a third.
What went down as well was the problems relating to bad attitudes and low motivation. The difference was night and day. The international staff worked hard, were positive and upbeat, and despite a longer learning curve got to be in time roughly equivalent of thier American counter parts.
Office workers who think their skills protect them have a very dim view of how developed the rest of the world has become.
The other thing that might also play into sourcing is disability. Any employer that says or implies as if everyone has to do things face to face all the time frankly isn't going to work. What if someone is deaf? I have a few deaf members of my family and frankly the argument can be made that WFH can be considered reasonable accommodations under ADA. The only way around this would be if significant numbers learn ASL. One of my cousins was in a bad car accident long ago. If it wasn't for the blackberry he had it would have been much worse ordeal.
Saving money is a nice idea don't get me wrong but in the private sector that doesn't mean higher profitably all the time. Saving doesn't mean an increase in income. How many 50 cent coupons does it take to pay for a house or higher ed? In non profits if you don't service your stakeholders they'll go somewhere else. Old rule of thumb was administration is 10% and 90% goes to operations (this is why wounded warrior is hated).
I'm all for saving money but a cost benefit analysis but it doesn't really add to the capital asset pricing model. Labor practices can be seen as a unique selling point on par with say environmentalism. Commodities of course can be cheap but that's just automation regardless of where it is.
Masks while outside is a bit much at this point IMO
Agree, but why not let each person do what they're comfortable with?
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