A Contrarian View on Outsourcing Gets it Wrong

A recent column by Jim Jubak published on MSN Money, "Why fewer U.S. jobs are going overseas," postulated that there will be deceleration of the rate at which U.S. jobs are being exported via outsourcing, attributing that outcome to "crisis in global logistics", meaning the problem of transitioning work from here to there. It was an eyebrow-raising piece, captivating in its contrarian view. But it was also flat wrong, perhaps because it failed to understand what's behind outsourcing.

The primary motivation for "moving jobs offshore" isn't really about squeezing the working class for a few dollars per hour. Sure, the benefits of labor-cost savings are real and substantial, but most corporate executives recognize that the global labor tide will equalize in time as the worldwide service economy becomes ever more interconnected. The facts that truly are driving most progressive strategies for outsourcing and offshoring are the demographic reality of aging workforces in Western economies, stressed educational infrastructures and the emerging wealth of emerging countries.

Mr. Jubak draws the conclusion that offshoring will take a pause as companies reconsider the costs and benefits and then proceed at a slower and more cautious pace as CEOs try to make sure that they are saving money -- and not dooming their company to endless problems with unhappy customers -- when they send jobs offshore.

That view simply underestimates the sophistication of corporate and government leaders who are creating a robust network of global services that transcend the relatively pedestrian issues of work transition. It also fails to note the intellectual capacity of some very formidable companies.

Perhaps most damning to the article's credibility is its operating premise that the biggest period of sourcing is behind us, and that companies aren't looking for sourcing solutions as much as they had in the past. I can tell you from practical experience that this view could not be further from the truth.

Just as there isn't a one-size-fits-all solution for companies looking to streamline operations, reduce costs or better manage operations, smart executives -- and there are still plenty of them out there -- don't pursue sourcing solutions solely for immediate financial gratification. The notion that sourcing strategies are driven entirely by gaining access to cheaper labor really misses the size of the wave approaching.

It's about positioning for access to the labor force of the next era and helping to help develop the markets for tomorrow's products and services.

It's not about moving jobs, but it is about increasing capacity: A globally interconnected ecosystem of service centers, universities, cooperative government policies and progressive corporate leaders is evolving to serve the ambitions of many of the world's largest and most significant companies.