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An argument for outsourcing

E5 Systems CEO Gordon Brooks says that while limits on outsourcing may protect some jobs in the short term, bans would end up doing more harm than good.

We've all heard about technology outsourcing, or "offshoring," as some have started to call it. It's been one of the biggest technology topics this summer.

The image the term immediately brings to some minds is of information technology workers being laid off. That's where most thoughts about outsourcing begin and end--with the idea of it being all about U.S. jobs versus foreign jobs. But there is much more to it than that. This becomes visible as you take a step back and look at the larger issues.

Of course, it's tough to tell people who have just lost their jobs to "take a step back" and look at the situation from the macroeconomic level. Layoffs are never easy for anyone.

However, it is also a mistake for a government to place limits on outsourcing or ban it. Sure, by limiting outsourcing, you may protect some jobs in the short term, but that would end up doing more harm than good.

Historical precedent
Historically, as jobs have been outsourced in various industries, higher-level jobs in other industries have sprung up to replace them. Outsourcing is not about the elimination of jobs but about their improvement and evolution.

It may seem that all technology jobs fit in the highest level of employment in today's economy, but that's not true. As some application management or systems maintenance jobs are outsourced, opportunity to create higher-level, more innovative technology jobs arises.

Sure, by limiting outsourcing, you may protect some jobs in the short term, but these bans would end up doing more harm than good.
The natural progression we've seen in the manufacturing and farming industries, among others, will be seen in the IT industry as well: The loss of lower-paying jobs gives way to the creation of newer, higher-paying jobs. It's never an overnight process, but it does happen, eventually.

An additional danger of limiting the importation of services from foreign countries is their inevitable backlash. Other countries will not look too kindly upon the United States and its products if it tries to halt their success. This will hurt U.S. corporations that depend on foreign sales to remain in business and will put even more jobs in jeopardy.

A fundamental concept of international trade--that "you need to buy there in order to sell there"--holds true for outsourcing. The United States prides itself on consistently innovating. History shows that its work force moves quickly from concentrating on one industry to building a whole new industry.

While outsourcing does have an immediate negative impact on parts of the work force, it can also free companies from the cycle of "just doing enough to get by" and from their inability to allot resources to research and development efforts--the very efforts that will create the industries and markets of the future.

Outsourcing, if managed correctly, can help companies remain competitive--and in more ways than just business structure and savings. Companies spend a very large amount of their internal IT budgets on simply maintaining the applications and processes they currently have.

However, to continue to be strong and competitive, companies' IT departments must also find the time, human resources and money to develop new projects and update existing ones. It is neither profitable nor beneficial to a company's future to have its IT employees bogged down in maintenance efforts.

In the current economic climate, IT executives are under pressure to balance both of these needs--and often have to make the choice to either refrain from new development or hold off on process maintenance--a no-win situation.

Outsourcing can change this. By shifting typical maintenance work to an outsourcing company, a company can free up its internal staff to work on new, innovative projects, which can both energize a company's IT staff and keep the company at the top of the market. The situation can also be reversed: Companies can keep the maintenance and updating work, opting to outsource new development they otherwise wouldn't have been able to handle.

Where do we go from here?
Limiting the outsourcing of technology jobs would stunt the growth of companies and economies. It would leave the United States out of the next round of innovation and the creation of new industries. It would be like telling Dell that it can't manufacture in China. Companies like Dell would not last if that were the case.

Outsourcing is not about the elimination of jobs but the improvement and evolution of those jobs.
Instead of concentrating on debating the pros and cons of outsourcing and how to put a halt to it, we should be looking toward the future and how to benefit from the evolution of global economics. As for textile or manufacturing workers whose jobs have dried up, there needs to be support both within companies and on the governmental level for retraining workers during a difficult transition period.

By concentrating on moving the bar forward instead of being caught in the past, companies and those who govern them will define excellence and lead the world economy.