Archive for July 4, 2011

Why Outsourcing Will Be Hard To Reverse

July 4, 2011 13 comments

Some people believe believe that outsourcing will reverse itself once wages in other countries rise, projects fail or fuel costs go up. Others believe that outsourcing will reverse itself due to emergent nationalism or protectionism. I think they are naive.

Outsourcing, was never really about lower wage costs, efficiency or overcoming regulatory hurdles.

Those were just fortuitous side effects in some industries and were used as logical sounding justifications. The real purpose of outsourcing is to extract equity out of corporate assets during the various steps of that process- from layoffs, asset auctions to setting up new companies, changes in prices and amounts of stock options etc. Those who benefit from this sequence of events do not care about the end results because they, like parasites, will have found another naive host company before the current one is dead.

Higher management (and their friends) like outsourcing because it makes them a lot more money than they would have otherwise make. Middle management-types support it because of peer pressure and greed. Of course, they do ultimately suffer the same fate as productive ex-workers. Some stupid workers even believe that outsourcing is about efficiency, capitalism, the free market and all that bullshit. Those who don’t see it as an unavoidable trend and sign of the times.

You cannot combat outsourcing unless you understand the core motivation driving the process.

It is far easier to make money by destroying and cannibalizing a business built with other people’s money and efforts than running it as a modestly profitable enterprise.

Most morons find the above mentioned explanation hard to accept because it flies in the face of one of their most cherished belief- that the ‘world’ is somehow ‘just’. They actually believe that rich people are deserving of their money because they are better than others. Once you accept that somebody is better than you it is not that hard to uncritically accept any explanation or idea popularized by your ‘superiors’.

So there you have it.. Now you know what really drives outsourcing, mergers and a host of other policies that destroy functional enterprises to enrich the very few.