An Ethical and Global Analysis of Software Offshore Outsourcing
Before acquiring its current negative connotation, outsourcing referred to the practice of turning over parts of a business to a company that specialized in that activity. For instance, Cisco Systems, Brocade Communications, and other leading original equipment manufacturers (OEMs) outsource their manufacturing to Solectron Corporation, where I was a summer intern. By partnering with Solectron, OEMs can gain access to the latest equipment, process knowledge, and manufacturing expertise without making substantial capital investments. In essence, outsourcing to Solectron enables OEMs to focus on their core competencies of research and development and sales and marketing. OEMs have found that the benefits they have gained from outsourcing their manufacturing to Solectron could also be acquired from offshore outsourcing their computer programming to lower-wage countries such as India, Russia, China, and Eastern Europe. The difference lies herein at the heart of the offshore outsourcing debate; when OEMs outsource their manufacturing work to Solectron, the jobs still stay in America, but not so when they offshore outsource software programming to India. A similar debate raged in the 1980s and ‘90s, as employers pulled manufacturing jobs out of the United States and moved them to Mexico, China, the Dominican Republic and other countries where workers were cheap and regulations were loose. However, the economic boom of the late ‘90s eased the pain of those job losses. These days, the movement of low-skill jobs is so commonplace it barely sparks an argument. The latest migration of jobs overseas is more stark because it takes the most desirable positions out of the U.S. economy. In the past, when factories closed, manufacturing workers were told they should just get some more education. Now, skilled workers are finding that education isn't enough, not when an Indian worker is just as educated and is willing to do the same job for a fraction of the pay. A microchip designer or financial analyst makes $7,000 a month in the United States. The same worker in India earns $1,000 a month.1 Significant cost savings, gaining access to skills not found elsewhere, and providing access to a new market all contribute to the popularity of offshore outsourcing. Nonetheless, if software outsourcing continues, those with less-creative software jobs who update antiquated code, fix bugs, and perform routine programming tasks2 should prepare themselves for career upheaval.
Meanwhile, in India… 3
The thousands of technically astute, English-speaking graduates of India’s elite universities are riding America’s outsourcing wave. Blue-Chip companies IBM, Oracle, and Intel have already established a presence in India, as have promising start-ups. India increasingly is landing high-skilled, highly paid positions for engineers, accountants and financial analysts formerly employed in the...