Outsourcing: the rebirth or death of the New England economy?

The Global economy is the new reality; tapping into offshore resources is not an option but a requirement for survival. And, healthy IT globalization, similar to a healthy democracy, creates opportunities for all. We all understand the benefits and the challenges of globalization but do we really understand the benefits and risks to the local economy? We must ensure our global partners create as much opportunity locally in US as we create offshore. Let’s keep it honest! This blog is an open and honest dialog on how can we leverage “offshoring” to the advantage of our companies, communities and country.

12 Comments

  1. Chris Cochrane on July 15, 2008 at 6:16 pm

    How do we ensure global partners create opportunity in the US? What’s in it for them? They pay their engineers much lower international wages, Why would they want to sub-contract any work back in the high-paying U.S.A? It is a great sentiment, but a huge challenge.

  2. Tony Saleh on July 30, 2008 at 3:18 pm

    Your partners already understand the value of having on site presence; currently there are various onshore, near-shore models that play into that.

    In terms of costs, a top notch offshore (high tech, say networking/webservices) engineer gets anywhere from $25-40/hr. That translates to $50-80k annual salary. If you include the high price of flying someone over in addition to accommodations, it won’t be hard for your partner to understand that hiring a local person in US, for US opportunities, makes a lot of business sense? Worth a discussion with the partner?

  3. Jamie on August 6, 2008 at 9:24 am

    Some of the other costs associated with the off shore are the ongoing training, traveling, and staying for long periods of time. In addition, the logistics of shipping equipment off shore and the cost to the company in logistics and taxes. All considered, the cost of hire is significantly higher than $25-30/hr.

  4. tony saleh on August 30, 2008 at 6:38 am

    Yes, good point, the cost certainly needs to be considered. But some of that is par for the course as we also need to train and educate our staff anyway.

    With the new election I am wondering how the perception plays a role here as both candidates are pushing hard on keeping jobs local in US. We can not and should not shut the doors but trying harder to keep some of the jobs local in US would be a good thing.

  5. tony saleh on September 19, 2008 at 3:46 pm

    Wow, what a crazy week in the market! The feds offered taxpayer money on the hook – our money – to rescue more private financial companies. So the loser CEOs walk away from the mess they created with golden parachutes carefree!

    Is Subprime mortgage crisis the root of all these issues? Could unemployment be the real root cause? As we lose more jobs, we forfeit more loans? How can we use globalization to help the local economy?

  6. brett on September 30, 2008 at 11:39 am

    What’s your take on the impacts of the various tax policies on jobs moving off shore? Will closing tax loopholes and putting the tax burden on the large companies force more companies to look overseas? What are the options for keeping jobs locally while still allowing companies to look for the best bottom line?

  7. tony saleh on October 2, 2008 at 7:23 pm

    Good questions! I think fair tax policies that do not promote pushing jobs offshore unfairly are a good start. IMHO we had put such policies in place to expand our market opportunities; we also had hoped to create larger demand for our supplies. By exploiting the tax loopholes, some large corporations have ended up exporting jobs to simply reduce costs – that in effect has and will hurt us in the long term. I think measuring the “best bottom line” has been skewed as a result of tax loopholes! I think we need to start weigh in the long term impacts into assessing “bottom line” – oxymoron?

  8. Dark Night on October 3, 2008 at 8:12 pm

    Tax is a share of income which is spent by government, intended for the common good, and should only be considered a burden if the money is NOT spent wisely. But we should also take in to account the big picture, that economy is a zero sum game were it not for labor productivity & natural resources. So as companies start paying salaries and taxes oversees, the market for their products is also going to move overseas. The US market has already shrunk by a devalued Dollar and 11 trillion in borrowing and will continue to shrink if a remedy is not found. You see Capitalism’s pursuit of profit has an unstated assumption; that such pursuit enables a community engaged in production to make a living. Once the community, which by the way contributes 46% of the tax revenue (corporations roughly contribute 8%) is job less; i.e. not productive, the US market disappears. So the apparent gain of off shoring is temporary unless the work force remains engaged in high yield productive work. Off shoring is also a form of technology transfer. But the technology does not belong to a corporation to make such decisions. It belongs to the educational system, research establishments, families, communities, work force and yes the tax payer who produced it over a period of hundreds of years. So we have to regulate against it. High technology seems to be a lost cause. Perhaps clean renewable energy is the next source of high yield productive work. Hopefully next time we won’t allow this industry to be whole sale off shored. Or at least leave the decision to elected officials rather than the guys who brought us Enron and Wall street’s melt down.

  9. tony saleh on October 8, 2008 at 7:38 am

    Technology transfer leads to export and ultimately job loss only if transfer is in one direction. As the global market matures, I am hoping to see more technology transfer in our direction that should translate to more opportunities and jobs in US. Question is more regulations or more education to rid corporate America of its obsession with short term gains, e.g., quarterly results. I am an ultimate optimist, I think there is hope for high tech, educating the next generation and managing out the unfit “leaders” is a good start. I am also ok with more regulations as long as it does not mean bigger government! 

  10. tsaleh on July 26, 2009 at 1:22 pm

    I would like to hear more from people who have experience with offshore development. What seems to be working and what seems to be broken? What do you think we need to do to enhance our business objectives in general while helping the local economy?

  11. tsaleh on March 30, 2010 at 10:22 am

    Now that health care reform is behind us, let’s hope more attention is given to creating real jobs in US. I am hoping someone in the administration takes a closer look at where the jobs have gone, where they are going, and most practical approaches to create more opportunities in US, rather than just throwing money at it and hoping it goes away! Better yet, what are you as a hiring manager doing about it?

  12. tony saleh on December 20, 2014 at 7:28 am

    If you want to learn more about achieving Balanced Globalization collaboratively with offshore partners, contact me at tsaleh@tdjconsulting.us. I will tell you how our partner in Chennai (Terafast) has been delivering services offshore while creating more opportunities local in US.

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