I’m one of the most patriotic people I know. My family has a long and proud heritage of military service to our country. I have a 30 foot flagpole front and center in my yard where an American flag flies each and every day. I’m a Scout leader teaching “duty to my country” to the next generation. I’ve driven American cars pretty much all my life, even when my Yuppie “Beemer and Benz”-driving friends made fun of me. Yes, I even get a tear in my eye when the National Anthem is sung just right…particularly in my favorite venue…
The essence of the complaint was that the program I was advocating was taking away money from talented people here in the United States, and giving it to cheap labor overseas, thus making it harder for the U.S. worker to make money.
I had to think long and hard about this situation before I came to any conclusions, but my mom helped by reminding me of a recent situation I faced where outsourcing actually SAVED domestic jobs.
Here is what happened…
About a year ago, I was working with a client building a premier, top of the line website and online business. This was a website which required some very intense database and design skills, as we were pioneering new ground with the business model. We needed smart, talented people to help us with the cutting edge technology. We hired a domestic firm to build the site, at a cost of $125 per man-hour. Needless to say, very quickly we were spending hundreds of thousands of dollars on design and development.
In preparation for launch, we hired a team of people to build the business. We had a technical project manager, a customer service person, a marketing person, and an operations person. We also had 3 full time web developers at the outsourced web development firm. All in all, there were about 7 people working in the business.
Then, a “perfect storm” hit the business. The initial investors were running out of money, the rapidly deteriorating economy scared off secondary investors we had lined up for ongoing funding, and technical glitches with the site were causing serious delays to market. It was a bad situation.
We needed to come up with a battle plan fast. The original investors/founders needed to make a decision, and they had two choices:
#1 Figure out how to stretch the limited amount of seed capital we had left.
#2 Cut their losses and shut down the business
I then found a company who outsources web development work to China at a cost of $25 per man hour (vs. $125/hour domestically). That massive savings allowed us to keep going, and get the business launched.
So the bottom line choice now became:
#1 Don’t consider outsourcing, close the business because of lack of funds, and wipe out 7 American jobs.
#2 Outsource some of the work to another country, lose 3 jobs in the U.S, but SAVE 4 other jobs. (Plus keeping the company viable it can grow and add even more jobs in the future.)
Which would you choose?
Further, if you listened to my Teleseminar, you would have heard that much of the stuff we were talking about outsourcing is very basic, standard kind of web work. It’s the “assembly line” of web development. Most of the really good web developers I know would turn their nose up at that kind of work anyway. (Or they would outsource it themselves!)
One other way to look at it:
If you want a mass-produced car that is well built, of satisfactory quality, and performs its function with no muss, no fuss, and little flair, you buy a Nissan or Toyota.
No one thinks twice about buying an import car anymore, do they?
However, if you want a high-end, hand built custom hot rod that will turn heads, you would have called American auto design legend Boyd Coddington (RIP 1944-2008).
The same is true of websites. If I want a custom designed, very cool website with all the latest bells and whistles, I call my trusted vendors here in the U.S. People who have a great design aesthetic, understand the underlying objectives of the site (commerce, networking, lead generation, etc) and who I will probably sit down face to face with during the design process.
But if I just need a “quick and easy” website built on a template, which has a simple function, and is more about utility than beauty, should I pay someone $100, $150, or even $250 an hour to design that? I think not.
The bottom line: My personal opinion is that outsourcing/off shoring is a fact of life in today’s global economy, and it’s here to day. Complaining about it isn’t going to change that fact.
Yes, I believe that used correctly, the strategy of outsourcing can save jobs, and make U.S. entrepreneurs more efficient, more effective, and able to make a bigger positive impact than we could otherwise.
PS – I know that by posting this, I’m probably offending all of my readers outside the U.S. Sorry about that. I guess you can complain to me and I’ll blog about THAT next.