On the Internet Business Mastery Podcast Blog, there’s an interesting debate going on, and it involves a little bit of what I do online. There are tons of very interesting comments and a lot of rage about the subject of outsourcing.
On one hand, online businesses outsource many tasks overseas because you really can’t beat the price. As I mentioned in a previous post, I had hired someone from the Philippines for $2.22/hour to do some web research for me. Hiring someone in the U.S. would cost me a lot more, and a lot of businesses rely on these low wages in order to succeed. In other words, many online businesses would not survive if it wasn’t for outsourcing.
On the other hand, outsourcing takes business and money away from within the U.S. Many people are losing jobs to people overseas who can do the same work for far less. Also, people are saying that paying someone $2/hour is just wrong and immoral.
As a response to that, the “pro-outsourcers” say that although they are hiring people overseas, they have U.S. based businesses that get taxed by the U.S. and contribute to the economy and are allowed to conduct business as they wish. As far as the low wages, $2/hour seems very low for the U.S. but when converted to pesos, $2/hour is a normal wage for workers in the Philippines.
Then, there’s some people’s feelings about our responsibility to America. It’s all really interesting stuff! I encourage you to have a look at Jay’s post and the comments over at the Internet Business Mastery Podcast Blog. I think I’ve read through them 3 times already.
I’m not sure exactly where I stand on the issue, and I usually try to stay out of these kinds of things – but I really do feel for the people who are losing their jobs to people overseas (since I know what it feels like to lose a job). On the other hand, as a business owner, it’s nice to be able to get work done at a cheaper rate and have more capital for other things. Also, it’ nice to be able to provide an income for some individual in another country who may be struggling and needs a job too.
What are your thoughts on outsourcing? Where do you stand on this issue?
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{ 21 comments (Click Here to Leave a Comment Below) }
I don’t criticize people who outsource some tasks overseas. First and foremost, you aid the world economy somewhere.
However, I live in a depressed state, one that’s been down for a very long time. I think this is a great place to outsource TO. Perhaps not as great as the Philippines, but it’s still a place where labor and cost of living is a little cheaper, and those dollars go farther for the employee than in, say, Silicon Valley.
Me, I won’t outsource until I make enough to make it worth hiring someone I know.
A large percentage of people in the world live on USD $2 per day. USD $2/hour is a very nice wage, providing for a family without being so extravagant as to alienate the family from the community. It’s a complicated issue and debate, but I’m okay with it.
That said, whenever it’s possible to support the local economy it’s a positive thing to do on many levels.
“Irresponsible” is really a subjective term. Are you being irresponsible as a business owner? No, you’re taking care of your business. Are you being irresponsible to other people in the U.S.? No, you aren’t really responsible for anyone outside your family.
The term that I would better place on it is “immoral.” Since we are in a horrific recession and most of our jobs are being sent elsewhere, I don’t personally feel that it’s moral to prevent yet more people from working by sending the work elsewhere just because it’s cheap. Other people’s opinions will vary, but that’s mine.
I’ve heard many, many people say that their business couldn’t exist if they couldn’t outsource their work elsewhere for peanuts. But then my question is, then should it exist? Should your business exist if you can’t do the work yourself and you can’t afford to pay someone a decent wage to do it? In my opinion, no.
Pat,
You say you’re not really sure where you stand on the issue, yet having already contracted work overseas means you’ve made your position pretty clear.
Having said that, anyone who criticizes a business for outsourcing work overseas is full of baloney. It is these same people who consider it “un-American” to short-sell a stock. Nothing could be further from the truth. A short sale is simply a vote of “no confidence” in a company’s management. The “dissenters” who short stocks are simply the system of checks and balances that encourage companies to operate efficiently.
I believe outsourcing can be looked at as the same sort of system of checks and balances for American business at large. The days of companies that operate like General Motors are over.
@LS: “Immoral”? It’s immoral to outsource at a rate that may enable someone in the world to afford food and medical care for his or her family when one might not even be able to pay a starvation wage at home? Bollocks! As the economies in these other countries improve, the consumers and businesses there are also able to afford more imports, and in many cases workers in the US, Germany, Britain, etc. will benefit. Narrow nationalism will only tighten the economic choke chain further around everyone’s neck. Here in Germany where I live it’s a favorite theme of the neo-Nazis to insist that foreigners (like me) be kicked out and only domestic products and services be purchased.
The current economic troubles in the US were not brought on by moonlighting librarians in the Philippines nor even by cheap Chinese factory labor. Greed in the financial markets coupled with a lack of regulatory backbone, predatory lending practices (brought on by lax regulation), household overspending and other factors are in fact to blame. If the economy is to stabilize at some point and the job situation in the US and elsewhere to improve, solid ties to other countries at all levels – including minor outsourcing like Pat does – will be an important part of that recovery!
This isn’t Germany. Most of our troubles come from nothing being made here and far to many jobs being outsourced. Our money goes to support dozens of foreign governments, even foreign armies, and now our unemployment rate is estimated by some to be as high as 20 percent. There is no nationalism, much less narrow nationalism. So yes, I find it far more moral to outsource jobs domestically.
LOL I am currently outsourcing writing at 1c/word to US based writers – I actually felt bad about it but its a legit writing site and the topics I had were US based and so far I have had no problem getting people to write for crap money!
I live in Australia. I won’t hire anyone local because of the added level of paper work that would involve my business in.
I am in fact a New Zealander – a country of 4 million people at the end of the world who totally opened up their economy in the 1980′s We don’t have heavy industry or a car manufacturing because we can’t compete. NZ is doing a lot better with the current financial crises than it did after the 87 crash (the NZ stockmarket took the longest of all country’s to recover ) – because we do have an open economy.
To be honest I don’t consider US a high wage economy when it comes to writing and similar – purely because of your lack of social safety network and low wages (compared to Australia) – but the debate is laughable – the sooner US opens up its economy the sooner you will get thru the pain – proping up Detroit car makers is just throwing good money after bad.
Australia is just as bad – Australia grows rice in the drought stricken murray river! I make sure I buy Indonesian and Pakistan rice – which is generally cheaper than the local stuff anyways.
Go where you can get the best quality and value– if that is overseas, so be it. I would hope it is in the US, but I would go with the pure economics.
I have recently outsourced my blog redesign overseas and I have no problem with it. I can’t afford to pay prices for a domestic designer and the quality of the work is excellent for less money. I would do it again and in other areas as well.
I think if you can do everything yourself, and you don’t mind it, then do that, and if you have huge profits, and you want people near you, then hire local. For growing online businesses, I think outsourcing is a real fantastic breakthrough…it lets you get things done, while still being affordable.
And quite honestly, helping developing nations is one of the best things you can do in this world.
The way I look at if you can hire someone local then great but if you can’t afford local wages then it is fine to outsource. It is better that the job gets done by someone than not get done at all.
I totally agree with Christina helping people in developing countries with actual jobs is great. Far better than just throwing aid money at them.
People need to stop thinking of it as “Outsourcing” and thinking about their own country. We are all human. We need to think about the world as whole. Running my online business, I have made friends all over the world. I much rather pay a friend to do work for me than look for a person in the USA just to pay a higher price for the same work. Don’t get me wrong, I do hire people within the USA though. (Only friends though) Both of my web designers are good friends and stay in the USA.
It really is tough, jobs are jobs, do you take care of your own or try and help out other countries. I would go with “whoever is best at the job” at the price your willing to pay
Whichever is within your budget
I think it would be crazy not to outsource, if the alternative is to take on locals for a month or so before going bankrupt due to unsustainable salary bills.
Far better to stay in business with cheaper outsourced labour, and keep on paying taxes to the government to help the domestic recession situation – you can’t really help anyone if you’re squeezed out of business yourself.
I agree with Camille, who said “First and foremost, you aid the world economy somewhere.”
Besides, we’re supporting our own economy when we spend the money we make (because of our outsourcing methods).
Theresa
if you can get away it it, then you should
if you can get away with it then you should
I think Outsourcing is great. I haven’t done it personally, but consider the following:
1) $2/hr being wrong/immoral
If this is the market demand overseas and provides a good income where workers will do it, then why not? We can’t measure standards of our country to those of another. In Cairo, cab fares around the entire city cost no more than $2. Is this not fair? No, it’s the market standard
2) We’re creating jobs
We’re creating jobs in a nation that probably has a lot higher unemployment rate than we do
3) Losing jobs here because of Outsourcing
How many entrpreneurs would pay someone $15/hr to do their writing, marketing etc. This woud be a huge hit on the budget and unless we’re very established and rolling in money, we wouldn’t probably hire someone full-time for this service. Additionally, American are entrepreneurs in spirit! Who will stick around working for someone else at $15/hr when they can learn to do everything and go at it on their own!
Outsource! Outsource! Outsource!
Hi All,
I definitely have to weigh in on this subject. Allow me to preface this post by saying that I’m a freelance writer and also an infopreneur. There is a hard line that you have to draw between hiring an US domestic writer and an outsourced writer.
First of all, you have to consider the state of the US freelance writer. Many of the US writers will underbid for the services of producing an article/ebook that supports the current standards of living. Those that take those types of writing jobs do considerable damage for the rest of the freelance writers in the US. These writers are not always seeking for a second income to support their families. Rather, the newest statistics on freelance writers are more likely seeking to support themselves. When US writers underbid to get a new project, it is often at the detriment of their standard of living (which honestly, is quite low… look it up on the US Dept of Labor).
Now, as an infoprenuer… (good God, I hate that term, especially since it is essentially an IM’er) the articles are wanted at a fast, quality rate. Where do we get this? By outsourcing. Some kid in India (used as an example based upon currency exchange rates and daily necessities costs) will produce 20+ quality pages for under $10. The US freelancers have to compete with this kid who will take in the same amount of money for a lower cost of living.
This is the dilemma. Do you want the cheaper or pricier version of essentially the same information? One option will support the US freelancers and the other will support a higher standard of living.
Yes, you can also blame the US freelancers for making this a scenario. Mainly, it is the newbies that want to be published somewhere who are bringing down the standards.
That is all.
KMc
Hello Pat, I have a specific opinion on this one. To your first question of “Is it irresponsible?” Absolutely not! While I do think you should have knowledge on the topic, don’t you get it when you read the research results? I think it is completely acceptable to use outsourcing and a very smart choice as doing so will free up your time to work on other specific projects that do require your attention.
To your second question of is it moral. I suppose it depends on how you look at things. I would agree that it would be nice to keep jobs state side but if you look at things from a moral stand point moral does not come with a nationality. You stated that you used an outsource talent from the Philippines for only $2 I can tell you that is about double the average hourly wage in the Philippines. I know this because I am married to a filipina. This is definitely not immoral because they simply have a lower cost of living. When choosing a talent you need to think in the local currency for that talent and not in US dollars. If you can look at it like that you will also find out if you are over paying for the service as well. I would recommend checking the local cost of living and average national wage before agreeing to an amount. (Strictly from a business stand point , it’s about the money)
I have a thought for awhile now that outsourcing may eventually normalize the world economy as workers from all countries will eventually get paid relatively the same due to bidding wars. We may be decades from that occurring but I think it could happen.