[harrymcwealth]

Many think outsourcing is wrong, and for the most part it is. But if you offer the employees a fairly high wage (as compared to the regular country wage) and benefits, then is it that bad?

Think about it...(remember benefits are a tax-write off)

Let's say a man in india, he has six kids.
the minimum wage is 8 rupees an hour (about $0.25 canadian).
they work 6 days a week (sunday off only).

Here is what I think would be fair...
1. The factory standards would be on par, on every level, to Canada's or America. It's a safe and clean environment.

2. Wages of at leat 30 rupees an hour (roughly $0.94 canadian).

3. Basic Education for the whole family, including the spouse and the worker himself (himself as is the tradition).

4. Full Health Coverage for the whole family, including (the worker's) parents.

5. Dentistry

6. Holidays, half day on saturday (as they are not accustomed to the fully holiday). And regular two weeks paid vacation.

7. Breaks - 3 breaks. 2 hours, 8 minutes break, 4th hour, 24 minute lunch break, 6th hour 8 minute break, 8th hour home time.

For three (3), the basic education would cover an equivalent of up to grade 8 here. in india they use standards, i.e. standard III
The education for the employee would include training for his job plus tuition for literacy and math comprehension, along with the spouse (optional).

For four (4), full health would include annual check ups, and payments for prescriptions for the whole family, and minor surgery.

For five (5) dentisty would be twice a year for the whole family.

Benefits only stop when the employee stops working there.

Hours: (They wake up early at 5am) 6am-3:40pm

So let's recap

1. Equivalent Factory Standards
2. Fair Wages (30 Rupees)
3. Free Basic Education for Family
4. Full Health Coverage for Family (Including Parents of Worker)
5. Free Dentistry
6. Holidays (1/2 day saturday & sunday.) (2 weeks paid winter vacation)
7. Factory Breaks (3 breaks, 8 minutes for the first two hours, 24 minutes for the fourth hour, then another 8 minute break for the 6th hour, then 2 more hours of work)


Total Cost to Company?
Total Wages: $2346.24
Education: $1680 (books and everything)
Health Coverage: $105 (seems ridiculous compared to education but keep in mind this as an average; assuming everyone is not sick)
Dentistry: $55

Total Cost: $4186.24

Here?
Total Wages: (At min. wage) $13,728.
Benefits: None.

See they can provide a much better quality of life style for the whole family for about 3 times less the cost of one canadian worker!

yup. i hope my calculations are correct. oh and don't forget the benefits are tax deductable for the corporation.

[Steve]

What about the added costs because the person is not physically infront of you. A lot of minimum wage jobs are labor jobs.

Phone marketing, engineering and the higher up skills are easily outsources in this fashion.

In my opinion, labor jobs should be outsourced as piece work. IE: my company will pay you $2.50 per product you make.

[Onyx]

I may not have understood this, but are you proposing that it would be good to have work done in Inida, but instead of taking advantage of the poor work and pay conditions you create an environment much more like you would xpect at home and you pay more than the average employer?

If so, how do you think that would really work out? And what are the long-term consequences?

I currently work for a large UK insurance company, but my job is off to India at the end of the year. I do understand the reasons behind that and with by business hat on I know that the company has very little choice at the moment, but there many unknown variables that may mean it wasn't a good move.

The wages of the person taking my job will be almost 1/10th of mine, but on top of that we have to pay the consultancy company that is managing the relationship too. Wages in India are rapidly rising as well, I believe. Factor in all of the challenges of moving the complex work out there and you certainly won't see much benefit in the first couple of years! But what will the situation be like in two years time. Will it still be cost effective? If not then it was a lot of work for no benefit!

We're also seeing issues with the distance that mean it is likely we'll need some people based in the UK. So it looks like my job is off to India, but is being in-sourced back into the UK. Crazy situation!

I know this is different to the manufacturing angle that you taked about, but I use it as an example because I think it highlights just how rapidly things are moving over there and before long it just won't be cost effective enough because they keep increasing their demands.

[jwood620]

It may be possible for it to be done right, but in the current environment, I don't think it is likely. Currently businesses see a price tag that is so low that they feel stupid if they don't jump on it.
From my own personal experience I have worked with off-shore developers at my "work" job, and we got burned big time. You definitely get what you pay for.
As far as long term affects, the one thing that I have yet to see answered... If you hire someone in india, and pay them even a decent wage, will they ever buy your product? And what about the person who's job just left for overseas, will they have money to buy your product?

[Dus10]

I see a lot of good points here. As far as compassion goes, I think it is a good idea, both politically, and humanitarianly, to help out India. If I were to outsource jobs there, I would want to really make the employees lives comfortable. Better wages, better benefits, it only makes sense. You can write-off most of it, and you are more likely to get a better cross-section of the society from which to choose (as far as competency, and such).

When we started outsourcing manufacturing jobs to Mexico a decade ago, we actually created more jobs than we lost... so, I am not entirely sure that makes much sense monitarily. Yes, you can pay these people less money, but the jobs that were created to manage the relationships and oversee the operations want to be paid fair market pay, in America, for their jobs. At some point, it seems like we are spending more effort to get the job done.

In regards to India, specifically, I have seen little competency. They do not understand the job they are doing, there is a language barrier (which I am actually quite surprised, because of British influence for years), and there is a feeling of resentment (honestly, there will always be resentment when people are lossing jobs closer to home).

I think over time, outsourcing manufacturing jobs could work out quite well... but corporate greed has gotten to the point where we are outsourcing service level jobs. It doesn't take much time to realize... this _IS_NOT_ going to work. If no one here has a job, then no one can afford to purchase goods or services, and then _EVERYONE_ is screwed... the U.S., India, the poor, and the rich.

There are other points to analyze. As far as manufacturing jobs go... there are goods that must then be imported, bringing the total cost of the goods closer to the original cost. Now, it would not take much to make this arena impossible. Would a ten percent increase in labor cancel out the savings? How about fifteen percent. Now I have not analyzed this, but there is going to be some point when that happens. As these nations that provide cheap labor begin to develop and inflation begins to increase the cost of labor, we will reach this point.

As far as service jobs go, many companies have started to realize that it is not going to work out as well as they have planned. Dell, for instance, outsourced all of its technical support to India. Customer service was horrible, and people were very upset about the loss of American jobs. Subsequently, Dell has brought back a portion of the tech support jobs for certain products (i.e. business grade products like the Optiplex, and not the Dimesion).

I think this is a trend that will continue. At some point this will collapse. Would it be a better idea to force the collapse sooner, rather than later? I do think so. If we cause the standard of living to increase in these nations, people there will begin purchasing the same goods that Americans (and others ) purchase. This will cause these nations to need to pay attention to their own domestic needs a bit more. Then, the cost of outsourcing will increase, and we will not want to do so any longer. For the Indians, this will hurt at first, but since they now have created domestic demand for these products and services, they will be able to sustain themselves at these levels soon.

So, forcing it to collapse sooner will be more benefitial to everyone. We do this by doing what jwood620 suggested. If we can provide a better way of life for these people, then they will start creating a domestic demand for their positions, and our domestic demand for their positions will diminish.

Now, I have been all over the board here (this is not a paper ). But thinking about this, you do begin to understand the positives and negatives of the situation. In the long run, this cannot be sustained. But, further down the road, everyone will be better off for it. Now, the question is do we make people suffer for a great expanse of time and have to rebuild and come back from behind, or do we move the process into high gear and get everyone past the pain and suffering?

[pentupentropy]

Global capitalization is a bad thing for everyone but corporate america. It exploits the bad living conditions in poorer countries and most of the time these companies are NOT offering the same competitive packages, insurance wise and etc.

The problem is that there is no easy solution. A company can't keep it's costs down when the average person needs to make $10 an hour or better to be self sufficient in this country. People don't want to see massive inflation, but everyone wants to make 20 or 30 an hour and get lots of overtime to boot.

I think that it's going to cause a couple of things... the first is a terrible cycle that puts countries like the US, Canada and the UK in a bad predicament. It will cause inflation in those countries where the jobs are moved to and then prices will start to rise again. Meanwhile, since the average bloke hasn't seen a cost of living increase (because we've been outsourcing jobs to keep inflation down), all of a sudden you have run out of poorer countries to manipulate where people can still get the job done.

Another problem it creates is the dissolving of unity world wide. I'm American, I love being american, but at some point people have to start to realize that we REALLY need to have all people in every country come together under one roof of economic policy. It's the only way to stop people from single-handedly manipulating foreign labor exploitation, world markets and so on and so forth. There's a great book for those of you who like to read about this... I think it's called "The Super Rich: the Emerging World of Global Capitalization" Google it or something. It will amaze you even more when you read through the dreadful statistics and then think how much worse it's gotten since the book was published (maybe 1998?)