Business, ethics, and morality

In the last blog entry, “someone who cares” expressed dismay that I seemed “proud” to be sending work outside the USA.

This raises some interesting issues about business, ethics, and morality.

Here is my opinion, and I would be interested in yours:

First, the purpose of business is to generate a profit. Capitalism in and of itself is a system. A business in and of itself is a structure. Neither carries any moral implications at the start. Sell a product/service to people who want it, and sell it for more than it cost you to make/provide it.

Now, how we conduct business does have moral and ethical weight. There are many behaviors that are unethical, in business and in life:

- Misleading people with inaccurate information

- Negligence in safety

- Financial mis-conduct

- Non-competitive practices like collusion

- Corruption and fraud

- Environmental damage/pollution

There are also many behaviors that are good/nice things to do, and often also make for good business, such as supporting your local community with charitable work, by creating jobs, and by working hard to make your company a great place to work/learn. And there are fantastic examples of managing ethical issues, such as Johnson & Johnson’s famous response to tainted pain relief medication. Also, companies on the 100 Best Places to Work list do some great things to retain and develop employees — but probably more because it is good business.

But business has an obligation to shareholders (or the owner) first and foremost to generate a profit — within the bounds of what is legal, moral, and ethical.

So is outsourcing immoral?

To me, it is not. To me, preserving jobs that are non-competitive is more immoral. Here in the USA, companies receive huge subsidies to protect a variety of industries: farming, cotton, high fructose corn syrup. And many jobs have structural costs that do not exist overseas, as General Motors and Ford are finally having to confront. So preserving non-competitive jobs creates a dependent class of employees that will one day face destructive change. Life is change, and business is no exception. The pace of change has gotten more rapid, but that is not immoral.

Outsourcing jobs to less expensive people takes away opportunity and creates opportunity. The people who don’t get the jobs (because they are too expensive) lose an opportunity. But they have the opportunity to “up their game” and go to the next level. In my case, using outsourced programmers lets me create an online site that I could never create with more expensive labor.

Those who miss out on the opportunity to build my site can take a number of next steps. They can start building their own sites for income. They can become an expert on outsourced labor, and help people like me find good international coders without the usual hassles. Those are only two of many examples.

To me, being a victim is the ultimate immorality. That’s because being a victim hurts the individual and, if one becomes an entitled victim, can spread like a cancer through society.

Having said the above, I think that successful businesspeople have an obligation to “give back” as much as they can. First, it is good “karma” for those who believe in that. Second, as a business school professor used to say, “Society gives you the right to run a business, and society can take that right away.”

Also, as citizens, we have an obligation to hold business accountable to good behaviors, just as we do for government.

So I appreciate “someone who cares” frustration at my outsourcing a job overseas. But I disagree that it is a moral issue. Also, I am neither proud nor not proud to be outsourcing. I am happy to have found an excellent professional provider at a low cost, though — regardless of where they work and live.

What do you think?

Free book: Jump Start HTML5 Basics

Grab a free copy of one our latest ebooks! Packed with hints and tips on HTML5's most powerful new features.

  • http://www.delyrical.com davidjmedlock

    Excellent post, Andrew. In my opinion, outsourcing should create opportunity for us here in the US. It should 1) push us to be the best we can possibly be, 2) push us to deliver what someone on the other side of the world can’t or aren’t (incredible service, fresh and creative thinking, local perspective) and 3) should force us to look outside of our comfort zone.

    We all have to make a living, no matter where we live. And many, many, many people have chosen to make their living in this industry. If you’re going to succeed, you have to compete on a global scale. Define a niche, build resalable products, deliver on-time and under budget, step up to the plate with unmatched customer service and build business relationships that will outlast outsourcing trends and look for markets where the technology cannot be (easily) outsourced due to laws and regulations, etc. (i.e. health care, government, finance, etc.)

    In addition, keep in mind that not every business out there will be able to outsource successfully. Some of them will try and fail. Then, you step up to the plate and show them how things should have been done to begin with. True entreprenuers see the opportunity in adversity…

  • Someone who cares

    Many people have commented on the previous article, and Andrew you have on this article stated that those who are losing out on the jobs here (in the US) can “step their game up” or “take it to the next level”. That shows me that the lone issue here is money. Not a persons performance – not their skill level, not their ability to do the job. It’s their price.

    All skills being equal between two developers, I believe the right thing to do is use someone who has the ability to contribute to our economy. I believe that helps everyone.

    I own my own Web Design and Development business. 80% of the work that is done I do myself. The other 20% is outsourced to freelancers. I know what it’s like to be concerned with the bottom line – I know what it is like to have that decision facing you. My point is, I’m not passing judgement about a decision I know nothing about.

    I know it’s a personal choice. My choice isn’t based on politics, business priciples, religious beliefs. It’s simply me making a decision based on a personal belief. Take it for what it’s worth.

  • Gerto

    I don’t think anything is wrong with outsourcing, if you can find work of equal quality for a lower price; why not?

  • http://www.dvdverdict.com/ mjackson42

    You’re in a different place, because you’re a consultant – the value structure for your line of work is different. You’re seen as better at what you do because you charge more. What about entry-level people whose value structure is the inverse? I think you’d look at it differently if you were on the other side, if you lived in fear that a consulting industry would spring up overnight overseas that would put you out of work. Then the issue wouldn’t be academic; it would be a matter of keeping a roof over your head.

  • webgirlNY

    I just posted on the other forum before finding this one.

    Clearly you are here to position yourself as an expert, a go-to guy for marketing advice in our community. You no doubt track the profitability of your contributions to this community and I assume you continue to contribute because you are converting enough of us developers/designers into customers to make it profitable for you to do.

    Can you not see how some of us take issue with your regular marketing and selling to us and then buying a product that we provide from a competitior overseas?

    And yes, I’m sure you’ve come across firms that have quoted exorbitant amounts for some of your sites, but I’m also sure that you could find developers and designers in the US who would be competitive.

    Then again, I’m the type of person who has no problem spending an extra 10%-15% buying a product at a neighborhood store that I know I can get cheaper on the internet. But I believe in community more than the bottom line. You don’t. Which is probably why you are so much more “successful” than I am.

  • Dan

    Plus, let’s not forget that Andrew contributes to this site, helping many thousands of people become better businesspeople, better providers, better managers. I think his contributions far, far outweigh the loss of American jobs that these projects represent. Personally, I’d rather he keep sharing his wisdom than give me a freelance gig any day!

  • http://www.lopsica.com BerislavLopac

    Oh, come on, guys, chill out! There is no “ours” and “theirs” economies — we all live on the same planet, now growing smaller thanks to communications. The competitors accross the world are no different than the ones next door.

    If you try to close off “your economy”, you’ll get what communist countries had until a decade ago. I’ve been there and believe me, it ain’t pretty. The only thing that allows us to prosper is competition.

  • concerned citizen and graphic/web designer

    I get the feeling that the main reason you would even take a chance on outsourcing work overseas is the cost and not a decision based on the skill or good business practices of an outsourced company.

    It is my understanding that the reason they are less expensive is because living expenses are less, not because U.S. designers and developers are bloating their costs. The more you outsource, the less you are contributing to the local economy, and that will continue to create higher and higher living expenses in your community. Stepping up their game or taking it to the next level will not enable them to compete with the outsource prices.

    Capitalism is a system and our capitalist country has built a strong economy because of it. But our country’s capitalist system will cease to work if we continue to move money outside of OUR system. Outsourcing will only increase the gap between big business and small business and our economy will decline.

    Having said all of that, I think that outsourcing is acceptable for a small start-up business that cannot afford U.S. prices, but once the business is established, they should look to the local market. If they don’t, their only hurting themselves and their community.

    An ethic is a set of principles of right conduct. I would think that the right conduct would be a positive impact on the economy in which you live and work. That would exclude outsourcing.

  • bobsorenson

    Over the years capitalism has been influenced by religious thought just as it has taken on different forms and variations. Some forms of capitalism bear absolutely no resemblance to each other while others are quite similar. Two forms that are quite opposite in their approach to capitalism and philosophy are Laissez- Faire capitalism and Modified Market capitalism.

    Laissez-Faire is defined as being an economic doctrine that opposes governmental regulation of or interference in commerce beyond the minimum necessary for a free-enterprise system to operate according to its own economic laws. A true believer in Laissez-Faire capitalism would believe in the separation of economy and state. The place where complete Laissez-Faire capitalism fails, however, is in mankind’s own greed. This often results in those who are stronger repressing those who are weaker. One could say this shows evidence of an influence of Darwinism in the formation of Laissez-Faire capitalism. The process of natural selection or “survival of the fittest” can be applied to business to justify immoral and illegal business practices, and this was done in America in the 1800’s and early 1900’s.

    Modified Market capitalism, by contrast, controls the human desire for riches and greed through more regulation than the “let alone” philosophy of Laissez-Faire capitalism. By taking into account the fact that those who are stronger will try to oppress those who are weaker, Modified Market capitalism controls the economy and thus, society, with stronger regulation. In fact, there is no country in the world that practices Laissez-Faire capitalism. All governments regulate the economic activities of their citizens.

    Social darwinism has run rampant in business throughout history. So-called “Robber Baron” capitalists such as John D. Rockefeller have often either forsaken Christianity or adjusted it to contain their evolutionist ideas of “survival of the fittest”. Rockefeller once said “growth of a large business is merely a survival of the fittest…the working out of the laws of nature…”

    Social darwinistic policies in the corporate world inherently destroys the economy and social structure of the country or area in which it is practiced. Unregulated capitalism creates a drastic imbalance of wealth and widens the gap between the rich and poor. It can also create an attitude of acceptance about problems such as racism, war, and sexism.

    Unregulated ruthless capitalism combined with Social Darwinism goes strictly against Biblical teachings such as “Do not wear yourself out to get rich; have the wisdom to show restraint.” (Proverbs 23.19) and “…or the rich man boast of his riches, but let him who boasts boast about this: that he understands and knows me…” (Jeremiah 9:23). Also the parable of the good Samaritan illustrates how instead of always seeking for our own financial advancement we have a duty to help out those in need.

    Religion, however much the secular world tries to erase it, will always have an impact on economics in world culture and community. From the ruthless, Darwin based, capitalism of today in America and pre-Depression America, to temperate capitalism practiced on Biblical principles, religion and morality retain an inextricable tie to any rational discussion of economics.

  • http://www.lopsica.com BerislavLopac

    Also the parable of the good Samaritan illustrates how instead of always seeking for our own financial advancement we have a duty to help out those in need.

    And in the spirit of that thought, you are more than happy to send your business to the citizens of less wealthy countries in order to help them.

  • Someone who cares

    That is not, however, Andrew’s reasoning for overseas outsourcing.

    “And now this Indian firm did a fantastic job on a site for probably 1/10 the cost of what a US developer would have charged.”

    It’s clear the goal is not to help the citizens of less wealthy companies.

  • http://www.eleytech.com beley

    The United States has high costs of living compared with other countries. Programmers in India and other countries across the world get great educations and can work for much less while still obtaining the same quality of life we expect. Outsourcing was a moral issue when slave shops were setup in third world countries, children were forced to work in sub-standard conditions and were paid incredibly low wages.

    That may still be the case in some circumstances, but not with the conversation we’re having today. We’re talking about outsourcing web development and programming. There are no slave shops, and programmers overseas make good money (sometimes great money) working for companies in the US.

    Where is the moral issue with sending jobs overseas? If the quality is the same, and the price is much lower then where is the benefit to your business to keeping the job in the US? The way I see it, the work force in the US is going to have to accept the fact that the world is changing.

  • http://www.developedsitesales.com Cutter

    From the early 1900′s to around the fall of the Soviet Union, the United States was a haven for money for the entire world. When you start a business the last thing you want is the government to collapse, your assets to be stolen, etc.

    Today things are different. The United States is simply experiencing a capital exodus to other countries. There isn’t anything wrong with this, it benefits the world and the people of the world as a whole.

    This isn’t even an issue of outsourcing, its an issue of a global marketplace. When the car was invented a lot of blacksmiths went out of business. Does that mean that the entire world should stop moving forward so that these blacksmiths get new jobs? No, it means they need to find new jobs in the new economy.

  • webgirlNY

    Where is the moral issue with sending jobs overseas?

    Morals are subjective. Where is the moral issue with shopping at Walmart? Is there a moral issue with shopping at Walmart? Depends on your morals. Certainly many people see no moral issue there at all.

    What are your morals? What do you value?

    Someone comes into our community and actively markets and sells his products to Sitepoint developers and designers. And then, when he has a web project, rather than giving back to our community he hires cheap, overseas labor that most of us can’t compete with.

    Good for the bottom line. Bad for the community. What are your values? Do values matter in business or should business owners always put the bottom line first? What about struggling business owners vs. obviously not struggling business owners?

    Some people will see no moral issue. Some will.

  • http://www.vividwebsolutions.com VividWeb

    An industry that I work in has a few companies that currently outsurce a large portion of the projects that they work on. The work is Oil & Gas engineering, but the idea is still the same, send work out of US (and Canada) and have it done at a fraction of the cost. One strange side effect that has happened in the last 6 months is that one of the Company’s that did a large portion of the outsurcing is currently struggling to keep is local employees busy, let alone send more work overseas. The perception right now is that by outsourcing this company has been black balled by its current and future clients.

    Now I am not completely sure whether outsourcing is to blame or if it is the quality of the work coming out of the outsourced company, but there is a definite slow down compared to every other company in the market.

  • http://www.lopsica.com BerislavLopac

    cheap, overseas labor that most of us can’t compete with

    And why can’t you? Because your cost of living is much higher than for the overseas guys, I guess. But why don’t you move at least to Kansas or some other place that has lower cost of living? Is it because this way you would be too far from your customers? Kansas is still much closer than India.

    Web/IT used to be an industry where you could earn quite a lot for relatively little work, especially in urban USA and during the dotcom bubble. But these days are gone, and you better adapt.

  • Lira

    Hah, karma always wins! It’s funny how something as artificial as nationality can be used to protect the insecure.

    Makes me wonder, I’m listening to the album of some guys from England. They earn their living selling albums. But I’m in Brasília, Brazil. Should I stop and buy something I don’t like from a local artist? As if…

  • pdxi

    Andrew,

    Thank you, thank you, and thank you once more for writing this post. This is something that I’ve been trying to explain for a long time, but couldn’t articulate anywhere near how well you have here.

  • pdxi

    Concerned citizen wrote:

    I get the feeling that the main reason you would even take a chance on outsourcing work overseas is the cost and not a decision based on the skill or good business practices of an outsourced company.

    Come on, he put the project on eLance! You, your next door neighbor, me, or someone in Sri Lanka could have bid on the project.

    That considered, and knowing Andrew from his articles, do you think he’d choose the lowest bidder? Anyone worth their salt would choose the person who offered the best mix of price and performance, and I’m quite positive that Andrew is worth his :)

  • aneitlich

    pdxi is correct. I just checked elance records and the winning bidder was in the middle — but had a great track record and testimonials; and also answered my questions and provided proof of being able to do the job.

  • Satya

    not immoral at all. send work wherever suits you in terms of quality and price.

    what’s immoral is favoritism.

  • Ulchie

    Citizens in the western world don’t mind taking out loans on a large portion of their earnings for 30 years of work, before they have done the work. Everyone seems to be fine with taking out loans and buying things with money for which they have not yet earned. C’mon, average house prices are $200,000-$400,000 USD for just a regular non-fancy home in some cities. This then pushes the rent up so that a young person starting out has to earn several thousand usd a month to cover basic living costs.

    We can’t compete purely on price, there are too many economic factors at play. Some countries are artificially keeping thier currency value very low so they can easily compete with the US.

    Two scenarios I can easily see. One scenario is the US continues to strive to be the best it can be through invention, research, innovation and entrepreneurs to keep the economy running strong. The other scenario I could see happening is the outsourcing continuining to increase until the point where many many people lose thier jobs and eventually causing a real estate crash since no one would be able to afford to buy a house for 200,000 USD or even pay the rent in many cases.

    A third scenario which I personally hope happens is that with the rest of the world growing and developing, their cost of livings will increase so they can no longer beat us to the ground on price by being 10-20x cheaper than US companies. Hopefully all this new money flowing into those companies pushes the inflation rate for thier currencies up.

    Of course there are a million other scenarios that could develop, but lets face it, something will happen. The rest of the world is catching up. Billions of people in other countries are getting top notch educations, performing research and starting up companies that are competing with the US. More money is currently draining out of the US economy than flowing in. This can’t go on forever. I am not a doom and gloom person either. The US won’t turn into a third world country or anything. But one day it may not be the center of the planet for so many people…

    But I am sure everything will turn out just fine. The US has a healthy head start and lots of smart people with money and power. A little outsourcing won’t be the end of the world. Perhaps the smartest will see the rest of the world develop and realize that they can benefit from it by owning companies in those regions. The world is turning into a global economy and there are many ways to prosper no matter where you live. There are always two sides to an equation. When a stock market temporarily crashes and the prices drop like a brick, millions or people lose money, but there are a smart few who realize they can buy large percentages of controlling shares in some very stable and strong companies, hence buying a company for pennies on the dollar. It all depends on how you look at your situation in life. There are always ways to capitilize and prosper if you stop and think.

  • http://www.lopsica.com BerislavLopac

    A third scenario which I personally hope happens is that with the rest of the world growing and developing, their cost of livings will increase so they can no longer beat us to the ground on price by being 10-20x cheaper than US companies. Hopefully all this new money flowing into those companies pushes the inflation rate for thier currencies up.

    This is already happening in many previously poor countries, like the former East Bloc members, some of which are already into EU.

    But I am sure everything will turn out just fine.

    And this entirely depends on the individual abilities. People and companies have never prospered by depending on a higher authority to protect them. I mean, it’s nice to be Paris Hilton, but I’d rather be Andrew Neitlich. :)

    (OT: Andrew — judging from your surname, do you have any Slavic roots?)

  • http://www.lopsica.com BerislavLopac

    Grrr, I mangled the quotes. Ah well…

  • patrikG

    There is a nice parabel: a scorpion sits by the banks of the river when a fox comes along.
    “Carry me across, fox”, said the scorpion.
    “But you will sting me and I will die”, says the fox.
    “No, I promise, I won’t.”
    The fox agrees and swims across the river with the scorpion on his back. Half-way through the river, the scorpion stings the fox.
    “What have you done! Now we will both drown! Why did you sting me?”, asks the fox in despair.
    “I can’t help it. It is my nature”, answers the scorpion.

    Capitalism as a system is not about ethics or morals. Capitalism is demand-driven. Societies have ethical systems which define it and societies create market systems based on their ethical code, resources, social structure and other factors.

    Obviously, the main gripe with a globalised market, especially in the service, but also in the manufacturing sector is that it drains national economies and has a negative mid-term impact on its labour-force. There is nothing unethical about outsourcing: for societies based on or participating in capitalism, it is a very clear-cut example of market forces at work.

    My point being: outsourcing is part of globalisation, it is a fact. The problem of loss of livelihood can only be dealt with on a national level and this is where national governments come in. Bemoan the fact that your government does not provide sufficiently for the unemployed – that is the ethical issue and that is something you can do something about.

  • Dr Livingston

    sometimes you cannot avoid but to outsource from another country due to the lack of skilled persons within your own – local? – boundaries.

    where i am from that is a servere problem for me as there are no skilled persons within the entire region – NE/Highlands of Scotland. not one person with 3 years experience, can i find with object oriented skills with Java or PHP.

    there are a few web designers in inverness that i know of but try to get them to develop server side is like trying to get blood from a stone… nigh impossible :(

    those that have approached me lack the skills or experience. i asked one person to describe 3 design patterns to me of their own choice and they looked at me with a blank expression :eek:

  • http://www.interactwebsites.com kwallenbeck

    Obviously in business it is about price. Those that get compeltely hung up on perfection and socialistic ideals usually have a stale business or it eventually fails.

    It occurs to me that we as Americans do not NEED to make $75 or $150 an hour even if we are really good at what we do. If US citizens in general were more satisfied with life and not be chasing after expensive cars and the lake house our labor costs would be much lower. Combine that with the rising cost of health care due to alcohol, drug, and cigarette abuse… There is NO WAY that a guy on an assembly line at GM should be making $25/hour plus all the benefits. It doesn’t make sense.

    I’m off my soap box now.

  • http://www.vodkafish.com VodkaFish

    I think cost of living will rise to current countries we outsource to (we being the USA). It will take some time, but it will happen.

    Anyway, why I’m writing – When I want to get something done fast and I’m short on time I generally outsource it. I don’t really care where the person is from, I just use a price+understanding+quality sort of feel and go with it. Many times it may be from someone abroad. But I’m not taking anything away from my local economy in the end. Most of the things I have done help a site to grow in some way. Someone here needs to manage it more and someone here brings in more money with it. I send money over there, and it helps boost more money over here.

  • friendsterindia

    US based software professionals can subcontract work to indian firms.They can handle the marketing part.Or they can come to india and start their developement centre here at low rates. Visiting india is not expensive.Try visiting bangalore,hyderabad,delhi, chennai, kolkata etc. Hire a consultant. You can easily get Office at technology park. Put a ad in naukri.com and you are ready to start operations in India.You can also contact me at techtiger@goowy.com . My friend’s firm is building largest tech park in Kolkata.You can get really great value from me related to property and hiring best talent.

  • http://www.actra.no/ Pacifer

    The sad part about people that fight against offshoring is that they create the downfall of their own country. Globalisation can’t be reversed. It’s a huge wave. So you need to either learn to swim or drown. Before you know it you’ve not only lost a few hours of work, you’ve lost your company and will soon work for an Indian company.

    Outsource, stay competitive and stay ahead! Then you’ll preserve your standard of living.

  • spainhower

    Someone comes into our community and actively markets and sells his products to Sitepoint developers and designers. And then, when he has a web project, rather than giving back to our community he hires cheap, overseas labor that most of us can’t compete with.

    webgirlNY, I understand your point, but it seems your ethnocentric views exclude overseas people from “our” community. Face it, this site is international, and it’s likely that non-US readers are also purchasing Andrew’s products.

  • http://www.satviz.com/GPS_Blog davestarr

    I hadn’t checked in here for a while. Wow what a (mainly) jingoistic firestorm. A businessman has work he needs done. He advertises on a world-wide market place for a willing worker. One appears, they strike a deal.

    Out of the woodwork come all these “me firsters” who probably didn’t win the contract because they didn’t even apply, and insult the nature of the man, his morals, utter thinly veiled insults about his ancestry, call down the wrath of karma, etc,etc.

    Betting a dollar to a dough nut most of the holier than thou ones drove home in a Japanese car, powered by French or British-owned gas, sat down in their Chinese computer chair, cranked up their Malaysian computer while viewing the article on their Taiwanese monitor and wrote their protests in a language borrowed from another country.

    Bidding in the world-wide market place is what’s happening today in business, and what intelligent businesses need to do to survive. Let those who don’t drive “foreign” cars (careful, many of the “big three” products are made in Canada or Mexico), who don’t buy gas from huge foreign companies (BP, Total, etc.), who don’t shop at Wal*Mart, don’t stand in line for Sony Play Stations, etc., be the one to cast the first stones.

    There is significant US-based research that concludes outsourcing has significant gains for the US and if the US doesn’t advance in business, the rest of the world will (has already) eaten our lunch.

  • http://www.lopsica.com BerislavLopac

    thinly veiled insults about his ancestry

    If you’re referring to me asking Andrew about his Slavic roots, that was not an insult — I’m just curious, as I am a Slav as well. I apologize if that got across as an insult.

  • mx2k

    i think a fundamental issue that has not been fully addressed, is that why outsourcing is often consideral immoral because the way it is done. An example is in order.

    lets say that an electronic company, named “x electronics”, woo’s a new ceo, one possibliy groomed by someone like jack walsh. They pay the new ceo between 10 – 25 million, and then even offer him/her an additional 25 million in stock options as long as the stock stays below x amount.

    Then they say they can’t afford the workforce, so they reduce the workforce, consildate jobs (so now one secretary is doing 5 jobs, one local tech is doing 3 jobs and only getting paid the same rate as before). , and then outsource various departments, including the IT deparment.

    Now when they liquidate those departments, they force those employees to teach the outsourcing company about their jobs, then they give them to the outsourcing companies over sees. The temps/employees of the outsourcing companies get no retirement plans, no health care, no benefits other than straight pay.

    (so you really can’t totally realistically say that it all equals out because the cost of living is lower there in every case of outsourcing. )

    So what they are deeming immoral are companies who complain about loyality and workmanship and being competitive, but then are willing to over pay a ceo more than their worth and not be willing to pay out what those employees who give that type of thing that they deserve. including a stable sure work place, benefits, and so on.

    Outsourcing isn’t evil in all cases, but in most cases in the US, it is, because of the way corporations do it and the fact that the way they do it, it totally undermines company loyality, stability, company morale, and promotes a cut throat type of enviroment, where people do anything to save money in order to keep their jobs, burning out your employees, and slowly taking away benefits that most employees that have worked there for a lifetime to build to only lose as their age gets close to retirement.

    how do you tell someone who has put in 20 years to their company, with “invested rights” to start over and get a competitive edge over someone who is 20 years younger?

    our work laws in the states also are ment to protect its workers. not all workers overseas have some of work laws in effect, some might better, however many are worse.

    fact is, alot of those company are outsourcing to get rid of employees with “invested rights” to their companies in order to give better offerings to ceo’s in hopes that their ceo with the big names will do wonders for their share holders, not because those people are less skilled which is hard to prove (however a couple of companies have lost discriminations of late by trying to do this.)

    now this isn’t all cases of outsourcing mind you, but its alot of cases of corporations, including those like honeywell, capital one, circuit city to name a few.

  • mjc

    So is outsourcing immoral?

    To me, it is not. To me, preserving jobs that are non-competitive is more immoral.

    The problem is, at the simplest level, America (and by implication most of the first world) is overpriced & uncompetitive. When this resolves (“corrects”) every job that could possibly be done abroad will be. An Indian callcentre will be taking your orders at the drive in burger joint so you won’t even be able to get a job there. In fact the only way you can get any job is by successfully providing a better value proposition than outsourcing – what’s the minimum wage again?

    Bush has already authorised government borrowings of $8000 Trillion (>$27,000 for every man woman & child) – this from Clintons’ Surplus in 99-2000. Your economy is going supernova & I don’t mean in a good way. The only thing keeping you afloat is the fear (of the banks) of what will happen if they insist on repayment. Once a significant number of Americans are made unemployed (getting your wonderful unemployment benefits) the economy will collapse into a black hole. I leave it up to the reader to postulate how a large, desperate, armed population will react to this – and when a large portion of your Army & National Guard are committed on the other side of the world things could get very ugly IMO.

    Outsourcing jobs to less expensive people takes away opportunity and creates opportunity. The people who don’t get the jobs (because they are too expensive) lose an opportunity. But they have the opportunity to “up their game” and go to the next level. In my case, using outsourced programmers lets me create an online site that I could never create with more expensive labor.

    Those who miss out on the opportunity to build my site can take a number of next steps. They can start building their own sites for income. They can become an expert on outsourced labor, and help people like me find good international coders without the usual hassles. Those are only two of many examples.

    So everybody in America should just create a website & expect to make a living. I can see that working. Who are you going to sell to if no-one has the income to buy anything?

  • Anonymously

    I leave it up to the reader to postulate how a large, desperate, armed population will react to this—and when a large portion of your Army & National Guard are committed on the other side of the world things could get very ugly IMO.

    I’m guessing never…

    Your economy is going supernova & I don’t mean in a good way.

    Debt is good…

  • hdsol

    I just have a question for all of you making your living out of the US. When the US supernova colapse happens, Where do you expect your money will come from next?

    All of our work has gone overseas and our biggest export has now become your paycheck. Remember that a larger part of you economy has to do with a steady supply from the us consumers. These are the very people whos jobs you are taking at an alarming rate. I understand that this is a global market but it still has to have a balance. When you take and take and give little in return to ensure a healthy economy how long will the gravy train last.

    Over here we still have mouths to feed and most of us are not lazy workers who drive fancy cars or live in emormous houses. We are the ones who are getting priced out of our very country by big business. I don’t agree with a lot of my governments policys but I still have to live here.

    I am not saying outsourcing is a bad thing but it is hard to compete when the field is not level. All of my expenses are higher so I have to charge more on a job to make the same profit. If you adjusted for the cost of living, most of you are making more then us.

  • http://www.lopsica.com BerislavLopac

    hsdol, you’re discriminating, and that’s your biggest error. The overseas competitors are no different than those that live next door to you. Not at all.

  • basia

    As far as I know USA has great debts around the world – greattrade deficit financed by big production of legal U$Dollars. Already some big groups have paid price of globalization – I mean for example industrial workers. However, it was old economy, so all protesters were told more or less kindly to modernize and update. And now new part of the New Economy myth is disappearing. There is no New Economy, there is Economy. In general workers in data industry were quite privileged last years. It seems, now it is coming back to normal situation.
    What cure? Survive and do not take loans. Pay your bills in cash. No credit card. Is it too hard for nation of shopoholics? Just it comes to learn all lessons so eagerly distributed by US advisors around the world, in poorer countries. Financial discipline and creativity.
    My brother has house rented from bank. OK, formally it is only loan. I have no loan and only flat. I can afford even low income periods to survive. I am rich. Don’t worry, I am in shiprepair industry, not any web design :-). I just like to learn some very general business knowledge which here is in extraordinary volume for free.

  • http://www.experioronline.com Jenny McDermott

    “..I am neither proud nor not proud to be outsourcing. I am happy to have found an excellent professional provider at a low cost, though—regardless of where they work and live.”

    OK, Andrew, that’s your right. And you do have to do what’s best for your company, I agree. But if you get overextended and face bankruptcy, do you think you’d be entitled to corporate welfare?

  • hdsol

    I don’t feel that i am discriminating. This is basic economics. Gross – cost = profits. when you have a lower cost then you can charge less for the same profit. THis is the theory that is the Walmart business model.

    My question was not out of discrimitation it was more out of curiosity. I was wondering if all of the countries that are booming (China, India, ect) depend mostly on us dollars or are they spreading their work globaly. It just seems that looking at the numbers I see that we are a major consumer of your services. What I question is that a plummet of my economy will just be the begining of a world wide rescession. The countries that loan us money are realy just putting the money into their own economy through the sale of goods and services. When this stops what happens next. I do not mean to disrespeact anyone. I just see things differently. You are where the US was years ago. In a growing economy. Every great civilization in the wold had its peak and fell. Some just do it faster then others.

    I have control over my personal wealth and am in a good position. My market segment of small business will be harder to outsource and I am also covering several different areas. I agree that many people here try to live beyond thier means. Big business in the country has given the people the means to hang themself. And this we have.

  • http://www.lopsica.com BerislavLopac

    This is basic economics. Gross—cost = profits. when you have a lower cost then you can charge less for the same profit. THis is the theory that is the Walmart business model.

    If it was that simple, the problem would be easily solved by moving all the US developers into developing countries (pun not intended :) ). But while overseas developers do win by lower cost, they still lose by their distance from the market. It is true that most of the market is in the US, which only means that US developers still have a great advantage over their overseas competitors. Just take a look at friendsterindia’s post above.

    As for your point about the US economy and its relation to the rest of the world: yes, the US is economically the strongest nation in the world, and its economical collapse would have a vast effect on the rest of the world. But I think that effect wouldn’t be nearly as catastrophic as you seem to think, for two reasons: First, the rest of the world is much stronger economically than it might seem from a US-centric point of view; EU, Far East (Singapore, Taiwan, Japan, China…) and Middle East, as well as probably Australia/New Zealand, are all economically quite strong and stable, each for its own reasons, and would probably quite easily survived a US economy collapse.

    And second, I doupt such a collapse would ever happen, simply because US economy is too strong for something like that. Sure you’ll have your ups and downs, just like everyone else, but even the thirties didn’t do much harm to the country in the long run. I have faith in you guys. ;)

    I just see things differently. You are where the US was years ago. In a growing economy.

    And now you’re too undiscriminating. :)

    Do you have any idea who your overseas competitors are? You could find them in countries as diverse as UK, Croatia, Jordan, India, Brazil and Australia (guess where SitePoint is headquartered); and it’s not necessarily that their home markets have been exhausted.

    The world is shrinking.

  • hdsol

    The world is shrinking.

    This is what it is. Point well said.

  • Pingback: Kelake

  • http://www.dazzleink.com dazzleink

    Out-sourcing doesn’t seem to be as much a bone of contention for being immoral so much as for causing U.S. companies to lose business to “unfair competition.”

    It seems wrong to complain for that reason alone. What business in their right mind would not want to save money by hiring someone whose rates are lower? Especially if the work quality is still high?

    Where ethical issues come into play for me is when I hear a company treats their employees badly with sub-standard pay, working conditions, etc. Unfortunately, I don’t have the ability to look into the background of every company I deal with.

    The compromise, I beleive, is to seek out a reasonable amount of information on the companies I deal with, and when unethical business practices surface, to refuse to do start doing business with or discontinue dealings with those companies.

    It’s not a perfect system, but one that satisfies the issue to some degree.

  • http://www.adammessinger.com/ amessinger

    But why don’t you move at least to Kansas or some other place that has lower cost of living?

    I live in Kansas. I can assure you that the cost of living here is nowhere near as low as, for example, New Delhi.

    A third scenario which I personally hope happens is that with the rest of the world growing and developing, their cost of livings will increase so they can no longer beat us to the ground on price by being 10-20x cheaper than US companies. Hopefully all this new money flowing into those companies pushes the inflation rate for thier currencies up.

    “…the Invisible Hand has taken all those historical inequities and smeared them out into a broad global layer of what a Pakistani bricklayer would consider to be prosperity…” — Snow Crash, by Neal Stephenson

  • Anonymous

    Did you guys ever think that companies outsource jobs because they get better quality of work for a cheaper price. Low wages isnt the only issue…it also has to do with education….and regardless of whhat most people think, the education in China and India is significantly better than that of America. Ask Bill Gates….he would certainly agree…

  • Smithee

    I don’t like to see anybody suffer, and like Michael Moore says, the US is in a “jobless recovery” (well maybe not now) because whilst many jobs get outsourced, many back in the US make money off it.

    I’m back in Canada now, but lived in NZ and Australia for many years so am well familiar with the issues – and have to remind anti-outsourcers in the US one thing – the US, the companies you have shares in, or work for etc, have branches and interests in many other countries in the world- and make money from those offices. So-called ‘free trade’ agreements are pretty heavily skewed in the US’ favour. So it’s not really fair to bleat about it, unless the US is prepared to divest itself of those profit centres and give the money to the locals.

    Like somebody observed about Wal-Mart et al, many of us like being able to buy cheap goods…..it helps our dollar go further etc, but is itself a form of outsourcing. Every item you buy made in China or Indonesia etc, is ‘outsourced’ but on the other hand, if you want to keep your job at Boeing or Raytheon etc, you’d better get used to international trade, as it works two ways.

    I don’t like to see anyone treated unfairly and don’t like unethical behaviour, but do recognise the world is indeed, shrinking.

  • yshekster

    Still a great article!!!!