IBM and Outsourcing

“Increased global trade was supposed to lead to better jobs and higher standards of living,” said Donald A. Manzullo, an Illinois Republican who is the committee chairman. “The assumption was that while lower-skilled jobs would be done elsewhere, it would allow Americans to focus on higher-skilled, higher-paying opportunities. But what do you tell the Ph.D., or professional engineer, or architect, or accountant, or computer scientist to do next? Where do you tell them to go?”

And, from a related article,

Stephenson’s “bricklayer” scenario might therefore turn out to be optimistic, in that his narrator lists software as one of the four industries in which the United States will retain an edge on its overseas competitors for at least the next several decades. The other three are music, movies and high-speed pizza delivery. I wonder if software is going to be on the real world’s list of U.S. leadership areas by the time we’ve caught up to the “Snow Crash” time frame. Between getting it written cheaply in India and being forced to practically give it away in China, I have to wonder where the business expects to find its revenue growth over the next several decades.

If you can’t make money on the bulk goods, it’s essential to retain an edge in the high-value specialties. For example, Japan moved into stainless steels and luxury cars when South Korea challenged its position in commodity markets. U.S. software companies aren’t doing that, however. I’m surprised to see Microsoft and IBM, both of which are aggressive producers and stewards of intellectual property, being so quick to let it take up residence overseas. Microsoft’s Beijing laboratory has become a world leader in computer graphics research, while much of IBM’s user interface research has moved to its China lab.

Which plays at the question, “how long ’till the American companies themselves are outsourced?” That is, if there’s enough programmers overseas to do outsourcing, why not just make the companies non-American, and move them whole-hog off-shore. There’s really no reason — other than people-networking, getting capital, and legal (I’d guess) — that management can’t be moved off-shores to.

More importantly, if you’re an Indian/Russian/Chinese etc. businessman/woman, or a government, you’re probably thinking right now, “why don’t I just start my own company that makes products instead of working on American company’s products?”

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