Outsourcing and Chinese trade infancy

It turns out outsourcing doesn’t always work the way they thought it would. Even Indian executives running companies (mainly technology/software) in the U.S. are finding that many core functions are still better performed by U.S. workers. Eduardo Porter writes in the NY Times today that one company tells it like this: cost savings for programming that’s done in India are 3 times less ($3500 versus $10,000 per month) but productivity ratios are double that–in the opposite direction. If you met your productivity goals six times more often with U.S. workers than with foreign workers, would it be worth it to pay more? Apparently even multiple attempts using various types of operations in India did not yield the kind of long-term results that make the desired difference in the bottom line.

The dividing line seems to be creativity in solving issues. Tasks that adhere strictly to a set of rules can get done efficiently at the cheaper rates. Those that require more imagination tend to be performed much better by U.S. workers. Love to see Eduardo do another article on what factors go into causing this difference…

Another article in the same publication talks about the China trade situation–starting off with the fact that China has decided to postpone its plan to set up–beginning June 1–an entirely different type of wireless protocol than that currently in use by pretty much the rest of the world. Meaning that your wireless laptop wouldn’t work in China. What do you suppose that plan was meant to accomplish?

Well, we certainly can’t say that motivations for business decisions in anybody’s country are unmixed. Walking the ethical line while pursuing the profit motive has always been and will always be a challenge. And remember, China is practically still a newborn in the business of understanding how to relate to the rest of the world.

In any case, between outsourcing and China’s see-sawing position as a threat and as a huge consumer of American goods and services (as we are of theirs), we have a lot of integrating to do: our U.S. visions and dreams and goals can never again be based solely on the idea of an economy isolated from the rest of the world. Any that do are sure to crumble.

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