World Economics Question

[Dinner]

Snoopy, please stop being dumb. He was quoting PBS which tends to be a very reliable source of news and information. That said I would like to see projections of job growth in the US broken down by field so we can compare the numbers & quality of those coming & going but claiming PBS was lying is beyond retarded.

[rah]

Those stats don't have anything to do with my comment.

I said More jobs sent overseas will be coming home then you think. You obviously think that the number is few. I think it will be more. Not enough to offset what is going out.

Two companies listed in your post are companies that we do work for and I know they're shifting quite a few jobs that were outsourced back. (all call center positions) And our company is doing so also. Maybe it will start a trend. yeah.

I have never said that a lot of jobs weren't outsourced. I'm just saying that it's been going on long enough now that there is more data in terms of quality, retention and thereby true cost and it's influencing some companies to rethink it. The true cost may be higher overseas, especially with the dollar falling. But I also know that a lot of companies could give a crap about quality and look to just the bottom line which will keep low cost markets busy for quite some time.

[Kidlicious]

Originally posted by rah
I said More jobs sent overseas will be coming home then you think.

Well I don't know how many come back. That doesn't seem as important as the general trend.

[rah]

Any savings is very important. As the larger companies do it and it's known why, other companies may look at it more closely and come to a similar decision.

And no, it's not going to stop jobs going to lower cost markets, the business world is too global and the genie is out of the bottle. But if it does wake up a few companies that paying a bit more can save money in the long run, maybe America can keep some of the non so called mickey d jobs.

We do a lot of IT outsourcing, but we're changed where the Project management is done, since the quality was so bad off shore since they didn't understand our business. So now while some of the lower paying programming jobs have been moved to another country, the higher paid project manager jobs have been brought back in country. I think it's important that the US be able to retain some of the more skilled and higher paying jobs. I agree that oursourcing isn't going away, but if people are willing to look at long term costs, maybe the job drain can be more limited to the lower paying posistions and some of the higher ones will stay.

This is considerably different then the attitude as short as 3 years ago. I'm just hoping it takes root. The numbers seem to support it based on the data that we've collected.

And americans should take every opportunity to voice their displeasure with the quality they receive at the hands of out sourced phone centers. Only by making their voices known to the companys will make them have to weight the cost of customer dissatifaction along with the hard costs when making outsourcing decisions.

OF course it's amusing that one of the companies in question only changed the call centers to insourced for the top customers. All their other customers are still transfered to off shore centers, but their top 10% are answered by americans in the US. I guess that tells the other 90% what they actually think of their business.

[snoopy369]

Originally posted by Oerdin
Snoopy, please stop being dumb. He was quoting PBS which tends to be a very reliable source of news and information. That said I would like to see projections of job growth in the US broken down by field so we can compare the numbers & quality of those coming & going but claiming PBS was lying is beyond retarded.

Lying with statistics doesn't mean having false statistics, which you would know if you'd read that book

It means you can use statistics to say things that are not true themselves, even though the statistics are true. In this case, those statistics say nothing about how many jobs are coming back - and also nothing about the total job creation in these fields; and nothing about the fields they don't show...

You're also quoting 2002 statistics, while rah is suggesting that this is changing now from what it was like a few years ago...

[OneFootInTheGrave]

Originally posted by rah
Any savings is very important. As the larger companies do it and it's known why, other companies may look at it more closely and come to a similar decision.

And no, it's not going to stop jobs going to lower cost markets, the business world is too global and the genie is out of the bottle. But if it does wake up a few companies that paying a bit more can save money in the long run, maybe America can keep some of the non so called mickey d jobs.

if it could... working in a multinational, and with outsourcing myself - it is just a matter of time. Today it is big multinationals and once they transfer, it will be "the business" to shift the services of the small guy - bookkeeper from India for 1/5th of the price - why not? Not yet as they are too busy over there building infrastructure to serve the multinationals, but after their demand saturates and infrastructure is built, outsourcing will be coming too to the medium and small business here... you will be able to hire support staff for your business over there via an agent and it will work out much better for your costs than hiring the local people. Sure it will not be for every position/business, but admin type tasks at the beginning, and whatever can be done remotely - later on... is what is coming...

At this stage it was overdone for multinationals- ie too much too fast, so there is bound to be some "bring back" actions to save some critical accounts and keep the contracts, however in the longer run (5 to 10 years) the "third world" will only get better in providing the services while staying a lot cheaper than what we are now. The services will be stratified as usual into "cheap" = very cheap country offshore, and that one one will be moving frequently, as when India for example gets it's prices too high it might move to Vietnam, or soon Africa etc.. "medium" - stays off shore and stable with good service levels, and "expensive" where expensive will mean stays in country for a lot more $$$ - premium type services.

This will only mean that most of the stuff will go away, and only premium top 10-20% will stay (similar to manufacturing today), and that will mean a big change in the service industry in general, ideally the west will stay R&D of the world, which it pretty much is but even more focused on it and selling the "new" to the rest of the "now richer" third world, and where the value of the service/product is exponentially higher than the "standardized" stuff... but this requires education and an economic shift to a larger proportion of such revenues in a typical western economy... some will make it and others wont, so over next 20-30 years there will clearly be a shift, and again the ones who adopt on time will prosper most, while the others will lag... so a lot depends on us & what kind of government we manage to elect, basically business as usual...

For example in a very high services oriented country like Switzerland - the adjustment does not need to be too severe, as most of the country base is already producing premium products, either manufacturing like watches, chocolate, or services like trade, tourism, financial services... those will not leave, and whatever traditional economy is left there will be able to live off it pretty good as it did over the past half century... Resource rich country like Norway will also be fine as well as long as they manage their resources well, as they seem to do right now, and continue to invest in people and their education. Ultimately the level of knowledge in the economy should transition in the level of "capital" - sure there are many caveats, but this is the basis in a "free trade" world.

Will be a bigger problem for more generalized economies like UK or US, but we will all be adjusting, it just depends on the skill of the coming governments on how well will this transition be handled - in the last one where manufacturing shifted UK was late a decade or two, but in the end we are there, so even if you make a slow start in this new major shift with services there will surely be some room for correction later on...

[OneFootInTheGrave]

& just to add - in the end everyone is better off as there is more wealth (stuff & services we need and want) produced to go around the world - and this is the real way to get the third world out of the gutter - the transition only needs to be handled smoothly, which will surely fail in some countries as usual, but in the end it will all be fine (at least economics wise, unless politicians nucular holocaust a portion of the world, but that is a different topic altogether and not necessarily triggered by what is discussed in this thread, but will surely affect the world economic situation if it were to happen)

[Kidlicious]

Originally posted by rah
But if it does wake up a few companies that paying a bit more can save money in the long run, maybe America can keep some of the non so called mickey d jobs.

I just don't believe that. Wages are about 10 times more in the US. I can't see the cost saving. When it comes down to it there's no way a company that pays ten times as much in labor costs is going to compete with a company with 10 times less unless the cheap labor is totally incompetent. As with phone centers experience adds to peoples skills so the foreign workers are going to get better at speaking on the phone.

[Kidlicious]

Originally posted by OneFootInTheGrave
& just to add - in the end everyone is better off as there is more wealth (stuff & services we need and want)

Well China is developing or is already developed that's going to add a lot of wealth. But the way that it's doing it is less than optimal.

[rah]

Those statistics are old.
The current costs in India have been rising dramatically the last few years.
The demand for those skilled people you mention is going up, hence higher pay.
Also factor in the falling dollar. Now granted it's going to be a long time before they're close but the gap is closing so there is actually a decision.

Eventually it will be too expensive to do it in India and it will move to other countries, that will need time to build up quantity, experience and infrastructure so quality will be an issue for a considerable time still.

We're currently paying 45/hour for India based high end experienced programmers. 35/hour from Mexico.

You can see the trend here. The difference is no where near 10 times any more.

[rah]

For regular programmers it's about 27 and 22.
Still nowhere near 10 times.

[DanS]

Originally posted by DarkCloud
DanS
So are you saying that should Country B develop a CA in a product that the working classes might create a sort of monopoly on labor, thus pushing up the cost and perhaps destroying the CA and making it worthwhile for the producers in Country A to continue producing the good in some quantity?

What I'm saying is that the concept of comparative advantage (basically, people doing what they do best) is not opposed to the working classes making out well or indeed even forming unions or guilds to enforce higher wages.

By all means, the working classes should make out reasonably well over the long term when exposed to trade. It's the short-term disruption that causes the heartache.

I can see this happening in some industries, like Imran's call center ideas, but what about when heavy industry moves abroad- like Steel, which is technique and infrastructure intensive... Or the American footwear industry, for example. The WSJ did a good article on how it is impossible to make shoes in america any more because the supply chain process is now all in Asia. What happens when mfg. becomes throughly gutted in one place due to massive efficiency in production elsewhere?

Most steel is not technique-intensive. Don't be sentimental about these manufacturing industries.

[DanS]

It really bears repeating what comparative advantage is. It's a beautiful concept that is both counterintuitive and true.

To be clear, it's not the concept of absolute advantage. Absolute advantage is intuitive but sometimes misleading about the best course of action to take.

First developed early in the nineteenth century by David Ricardo, "comparative advantage" holds that we should export not those commodities that we can make more efficiently than people in other countries can make them, but those commodities that we can make most efficiently relative to the efficiency with which we make the average good or service. This principle has a corollary: we should import not those goods and services that we make less efficiently than other people make them, but those goods and services that we make less efficiently than we make goods and services in general.

http://econ161.berkeley.edu/movable_type/archives/000129.html

Perhaps a useful way to think about this is to think about the labor pool as a precious resource. How would you divide this resource? You may have an absolute advantage on an industry like steel, but would that be a good industry on which to spend the precious resource of our labor? The market suggests that we would be better off doing almost anything else.

[DarkCloud]

In late 2002, computer giant Oracle announced that it would double its workforce in India. Texas Instruments already employs over 1,000 engineers at a Bangalore campus

Pretty good argument for increasing the number of H1-B visas in America, isn't that?

Why is America driving talent away.

~DC.