How can we change things in the U.S. so we don’t have to outsource to India and other countries anymore?
We can’t—and we shouldn’t.
Look, the debate over outsourcing should be over by now. It was pretty much all about politics to begin with. The question now is not how do we stop outsourcing, but how do we use outsourcing to enhance competitiveness in what is, and forever will be, a global marketplace?
Of course, outsourcing has not been painless: Layoffs hurt. Still, they have to be seen as part of a broader picture, one in which outsourcing is not only integral to the world economy but crucial to our own growth.
Integral because economies always respond to consumer demands. People have come to expect the lowest price and the highest quality in one package. And companies can’t deliver on that expectation without moving around the world to capture cost advantages and innovative minds.
As for the impact of all this on the U.S., well, it’s pretty hard to criticize. Since mid-2003 the American economy has grown about 20%. That’s more than $2.2 trillion—equal to the size of the total economy of China. Seven million jobs have been added. Wage growth has accelerated from 1.5 % in early 1994 to more than 4% in the last year.
These statistics, you can be sure, mean that outsourcing’s opponents, many of whom disappeared into the woodwork even before the 2004 election, will not be out there in the 2006 campaign. Those foes had predicted American technology jobs would migrate in hordes. In fact, tech jobs have increased 17% from the pre-bubble 1999 level. No wonder most politicians now tout the overall benefits of an integrated global system.
If there is a problem with the U.S. economy right now, it is not the loss of jobs because of outsourcing. It is the shortage of skilled labor because of immigration restrictions. Indeed, if Congress really wanted to make our economy more competitive, it would raise the limits on H-1B visas, making it easier for educated foreigners to work here. Ideally, the whole program could be replaced by a permanent green card system that would draw skilled workers into a more positive, long term relationship with the American culture—and ultimately build a better economic future for all of us.
So forget outsourcing. America’s labor challenge today is talent insourcing.
This question and answer originally appeared in Business Week magazine on July 31, 2006.
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