There is a great article by S. Mitra Kalita in today’s WSJ titled Outsourcing is Out, which discusses new “ . . . borderless partnerships to facilitate innovation and efficiency”, as the next wave of evolution in global outsourcing. In other words, though stronger connectivity the business world will find a way to move forward on a positive trajectory.
“American companies must rebuild systems and protect themselves from another meltdown. They can’t do it without India…”
Understandably, a lot of people’s knee-jerk reaction in hard times is to keep all the jobs at home in America. We want to feel like we are taking care of our own first, before we worry about the rest of the world. Just like the all too familiar airline safety instructions to put the oxygen mask on yourself before you assist others.
The reality is that outsourcing to less developed countries such as India is one of the best ways to stimulate the US and global economies. Whether we like it or not, we are now in a truly global economy. Even just 10 years ago, the top countries of the world had separately timed economic cycles. Now, because major companies and banks of the world are investing in the same products and businesses without regard to borders, this last recessionary cycle has served to put much of the developed world on the same economic cycle. One could even argue that until now we weren’t actually working under the guise of a truly global economy, we were simply working to get there.
The name of the game at this point is to increase productivity, and the reality is that production/service costs in the developing world are much less than in the US. Creating partnerships with the less developed world will create three positive outcomes. One, productivity of US companies will increase by creating the same products for less. Two, it will increase the level of education and standard of living in those countries, creating many more global consumers. Third, it will serve to free up portions of the US workforce to move up the evolutionary chain. Just as when computers moved in, the workforce changed and an entire new industry opened up with millions of new jobs. That wasn’t a one-time phenomenon; it’s part of progress and the making of economic cycles. Growth, in any situation, requires innovation and change.
The next wave of new jobs will include a much more creative and collaborative bunch who will figure out how to solve global social issues through capitalism, bring down healthcare costs while still pushing the envelope of discovery, and reverse environmental damages while enhancing productivity. We need connectivity and creativity in order to solve these complex issues the world faces. Businesses that can see such a world will be the most successful.
