[ale] Indian outsourcing

[ChangingLINKS.com]

Indian Competition by Stephen Touset
http://www.touset.org/blog/archives/2004/01/29/indian_competition/

I'm glad somebody has finally taken a rational stance 
(http://www.wired.com/wired/archive/12.02/india.html) on the Indian 
outsourcing issue. As Jordi will tell you, I've from the beginning stated 
that our current trend towards outsourcing IT is not only inevitable, but 
probably for the better, too. It's simple capitalism, folks. It's a perfect 
example of the free market at work. Indian programmers are providing a 
product, their labor, at a better price/performance efficiency than American 
ones are.

Many people blame this trend on companies, but I place the responsibility on 
consumers. We continually demand better products at cheaper prices. What most 
of us never accounted for is that nature provides a balance--although we may 
get those, we lose something else. However, that's not to say we're worse off 
than before, or that things will be worse in the future. While we may lose 
jobs in the short-term, that's for the better. It's natural selection. Many 
people neglect the fact that in this trade-off, we're still receiving a 
benefit: lower prices. 

There also seems to be a misconception that lost American jobs are gone 
forever--this, as well, is untrue. As unemployed laborers become more 
numerous, their cost drops. As their cost drops, jobs that were once 
unavailable because the cost outweighed the revenues suddenly open up. 
Americans will be reabsorbed into the workforce, and will be placed in jobs 
that are more effective uses of their labor. Given, pay will probably drop. 
That's not a problem, thanks to the equilibrium of the economy. Pay dropped, 
but didn't we cover the fact that prices did, too? And if you'll notice, that 
implies the valuation of the dollar on the exchange market. When fewer 
dollars are buying the same product, that means the dollar is becoming 
stronger. In common terms, it's deflation. In reasonable amounts, this is a 
Good Thing?.

Americans are often the first ones to criticize a monopoly. Wal-Mart, 
Microsoft, and others are evil monopolies, right? Well so was the American 
job market. We've for decades charged prices that, on the world market, are 
princely sums. I'm not surprised in the least that companies have found a way 
to circumvent our monopoly on the product of labor. Once again, competition 
is going to take effect. The net result is that we'll be forced to be harder 
workers, and probably accept lower wages. Sounds bad, right? Not when you 
realize how circular and intertwined a capitalistic economy is. Our lower 
wages and better products will benefit companies. They have lower costs and 
better products. Thanks to competition that they have to face, that means 
they'll lower prices for us. In the end, it translates to better products 
being created at roughly the same price.

The worst thing we can possibly do is attempt to combat this change. 
Regressive protectionist policies may help in the short-term, but American 
consumers' demands will force American companies to find a way around the 
restrictions. We thought we had an indefinite monopoly thanks to location and 
immigration policies, but computers and the Internet have allowed businesses 
to circumvent this limitation. The phrase, "life always finds a way" applies 
here, too. But shouldn't we hold out as long as possible? Won't every day we 
prevent the outsourcing of jobs allow us to benefit further? In the short 
term, probably. On the other hand, the current waves we're feeling throughout 
the IT job market are directly proportional to the disparity between the 
wages and product quality that Americans and their Indian counterparts 
provide. We've insulated ourselves, only to be affected by a larger degree 
now that that insulation has faded. Rather than have the changes occur slowly 
and naturally, allowing us to adapt at a comfortable pace, we've been 
protected for decades, and now are being flung wholly unprepared into the 
world market. It's my belief that the longer we continue to insulate 
ourselves, the more it will hurt when the inevitable finally occurs.

-- 
Wishing you Happiness, Joy and Laughter,
Drew Brown
http://www.ChangingLINKS.com

Very well written. I feel it is definately worthy of the archives.