The Foreign Factor

In the long run, the positives of outsourcing may outweigh the negatives.

Outsourcing jobs abroad has become a major political drumbeat this election year. The rising economic power of India and China in particular is beginning to impact American life as we know it.

Most of our toys and sporting goods -- and many of our textiles, telephones and computer components -- come from China, the champion low-cost manufacturer, allowing us to pay less for these goods. Call Delta Air Lines for a reservation, and you're likely to talk to someone in India, the virtual back office for more and more U.S. companies.

Once again, the United States is going through the inevitable process of economic change. While the effects of outsourcing can hurt American workers, what gets lost in the heated political rhetoric is that this trend is good news for the vast majority of us.

By focusing on services and manufacturing, India and China are bringing dramatic benefits to Americans. They are boosting our buying power, raising employer efficiency and pushing many of us into more rewarding jobs -- jobs that, for the most part, require higher education or expertise. America now dominates in fields that require the highest level of skills, such as biotechnology and pharmaceutical research.

Brainpower from Asia is delivering gains here at home that are even more vital. Insurance companies, including Aetna and Cigna, have cut the cost of back-office work -- such as inputting data and running computer applications -- by assigning those tasks to workers in India, and some of the savings have been passed along to their customers.

For its part, China serves as a potent inflation fighter for U.S. consumers. Step into a Wal-Mart store, and you'll see a "China-Mart" in many aisles, with inexpensive Chinese handtools, furniture and clothing. Less visibly, China supports the U.S. economy by investing its dollars, more than $152 billion to date, in U.S. Treasury securities.

So, while many jobs will move offshore, the U.S. economy may still benefit. And re-educating and retraining our work force may prepare Americans for new and better jobs. After all, jobs have always been created by innovation, not by clinging to uncompetitive industries.

From Reader's Digest - September 2004

 

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