Why Do We Demonize Outsourcing?

by Darwin on February 10, 2010

I read with interest a rather lengthy and angry comment chain on this recent post from Get Rich Slowly, one of my favorite blogs.  Essentially, a guest poster highlighted how she’s outsourced several things in her life that most of us do ourselves ranging from cooking to virtual assistants.  I can understand how most people don’t identify with this mentality now, but I believe in 10-15 years the same article may not raise an eyebrow.

People, let’s be honest here.  We all outsource parts of our lives.

If you go to Jiffy Lube, you outsource doing your own oil changes.  When you get a haircut, you are outsourcing a job you could do yourself.  Many people rely on landscapers to do their lawns.  Two generations ago that was unheard of.  Our grandparents all mowed their own lawns.  Why?  Because someone else can do it a) better b) cheaper or c) because you just don’t want to do it.  You just take these tasks for granted now and say, “Well, that’s not really outsourcing”.  Well, it is.

So, we’re all guilty as charged.

It just comes down to personal preferences.  I don’t outsource much of what the author does, but I understand the perspective.

“Theory of Comparative Advantage”

It’s the way the world works.  The sooner people understand it and stop resisting it, everyone would understand outsourcing is an efficient and appropriate activity in the vast majority of cases.  This goes not only for personal activities, but applies to the corporate setting as well.  Should the US still be in textiles and assembling circuitry?  No, we outsource that to Asia as we’ve become more of an innovator/knowledge economy and shifted away from industrial manufacturing.  This isn’t a welcome message to someone who lost their job to outsourcing.  But this is a force that cannot be stopped.  People must adjust (see How to Avoid a Layoff) and accept this evolving reality.

Regarding paying someone in a developing country 1/10 of what an American would demand for the same job, is that really any less outrageous than paying an American 10 times more to do the same job someone else could do?  Seriously, if you’re paying someone in the US to perform a virtual task or a task that requires very little special training/experience that could be done anywhere in the world, you’re overpaying for no reason.

Is this exploitation?

Let’s consider the alternative – poverty, starvation, rape, genecide, slavery.  These are some pretty harsh terms but look around.  These are all alive and well around the world (actually, 4 of these are within the US still as well), but the more the world is “flattened” by spreading technology, opportunity, jobs, technology, etc., the more these horrific human conditions are diminished.  Without stereotyping by naming countries, it is still common practice for a man to rape a 7 year old girl on her way to school with the belief that he can “transfer” his HIV condition to her and cure himself and it is still acceptable to sentence a woman to death for being raped because she dishonored her family.  As women especially, but men as well, begin to earn a decent wage with the advent of virtual work and technological progress, the standard of living improves and more “western” behaviors and beliefs begin to take hold.  Given that the US isn’t especially welcome in much of the world, it’s tough to argue that a transition toward a western mindset and economy isn’t beneficial to much of the world.

This isn’t exploitation.  This is opportunity.

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1 Evan February 10, 2010 at 11:57 pm

I agree with you it isn’t that simple, and in reality we all do it to a certain extent. The anger arises when that outsourced job goes half way across the country. We demonize outsourcing because it is easy and seems logical.

Someone in a country we can hardly pronounce took our jobs.

2 You Moron February 11, 2010 at 9:48 am

Please stop “writing”.

Darwin Reply:

@You Moron, Wow, that was insightful! Perhaps you should “outsource” your comment activities since it’s obviously not a strong point. Seriously, because you’re anonymously commenting from afar, it’s pretty weak to insult someone else in this manner because you disagree with their opinion. If you’re going to leave a comment here, at least provide some rationale for your reasoning. It makes for a much better experience for all of us.

Paul Kamp Reply:

@You Moron, scare quotes around “writing”? Really? This article makes perfect sense, and is backed up by decades of economic research. Don’t shoot the messenger.

3 Evan February 11, 2010 at 10:45 am

Calling me a moron or you lol? May be calling me one

Darwin Reply:

@Evan, Tough to say. The comment was so useless, it’s difficult to tell who it was even directed toward.

4 Craig February 11, 2010 at 11:50 am

I don’t know why, I have outsourced things that I can’t do and have had good success with it and it saved me time.

5 Investor Junkie February 11, 2010 at 12:41 pm

@Darwin: You beat me to this post! Good follow up post. In general people need to understand trends (even if they don’t like them) and be ahead of the curve. I suspect the people with the negative comments, never owned a business, nor value their time.

Personally if this were my blog, I would remove the “Moron” poster as it doesn’t add any value to the conversation.

6 MLR February 12, 2010 at 2:17 am

People seem to combine the principle of off-shoring into the word outsourcing. They are different.

So when a company says “We are outsourcing our IT department so that we can focus on our core competencies” people immediately see red and envision jobs being sent to India. That isn’t necessarily the case, they could just be outsourcing the IT work to a US company.

Interestingly enough, a lot of companies that off-shored jobs are bringing them back. They realized that it wasn’t all it was cracked up to be… especially when you have to start worrying about contingency plans for millions upon millions of dollars of product because of a monsoon or earthquake that shut a city down for weeks.

7 David @ MBA briefs February 12, 2010 at 9:40 am

Great article, and I’m on board with you 100%. I’m guilty of trying to do too much at home and work and end up feeling overwhelmed and stressed out. For some reason we have two schools of thought – those who buy into the 4-Day Work Week philosophy of outsourcing everything (I think the author pays people to go to the bathroom for him) and those who insist on outsourcing nothing. As you point out we already outsource plenty of activities, and it’s so commonplace now we don’t even consider it outsourcing. So if this is the case we should logically evaluate what we’re better of paying others to do and what we can do better for ourselves. I wrote a similar article a few weeks ago that’s a little more tongue in cheek than yours (You, Inc. – Know when to outsource)- I’d appreciate your feedback on my thoughts. Great article!

8 Financial Samurai February 12, 2010 at 11:15 pm

I enjoyed Erica’s post, and I’m impressed with her smugness (income, hiring, renting). She is milking her “I sold my company for $1million” very well so she can up sell on other stuff. It is the American way. It’s not the Samurai way, but to each their own.

Remind me never to brag or gloat on my site. Thanks!

9 tim1198 February 19, 2010 at 7:59 am

I agree with your comparative advantage statement. Except when the comparative advantage is artificially created; such as some of the offshore manufacturing. In China, the average factory spits out black smoke in the middle of town 24×7. Every car and moped also spits out black smoke into the atmosphere. I was in Tianjin for 3 weeks and never saw the sun (due to the smog).

Factories in the U.S. have significant costs associated with OSHA and environmental safety standards. Add those costs into a factory in China or India, and the cost gap would close; although probably still would be less. We still have to work on our cost premiums associated with Unions and high cost of doing business to stay competitive.

10 Budgeting in the Fun Stuff February 23, 2010 at 1:34 pm

That post on GRS was one of the reasons I started my blog!

The negative comments about hiring a maid motivated me enough to spend this last weekend getting a blog started for everybody who didn’t freak out. I enjoy getting a great deal as much as the next person, but why get mean to someone just because they don’t want to do their own housework? I’m sure I’ll catch alot of crap when I really get into this, but I’m with you. Outsourcing isn’t evil, it’s normal.

If we make enough to support ourselves and save to support ourselves in the future (like 40%), why not splurge once in a while with the rest? I happily have biweekly maid service and a biweekly lawn service…I hate chores and lawn care and Jacquie and Alex needed the jobs…it’s a win-win in our opinions.

I also loved the follow-up post on GRS from J.D.’s wife.

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