Reader Opinions on the Offshoring Backlash

Only 5 percent of those who are offshoring today say public disapproval will cause them to cut back.
CFO StaffJune 1, 2004

In our exclusive CFO survey, 275 finance executives shared their offshoring plans, experiences, and opinions. When asked, “What is your opinion of the recent backlash against offshore outsourcing?” our readers provided a torrent of responses.

We divided the responses below into two groups: Comments from executives who are offshoring now or who plan to (comprising 28 percent of respondents) and comments from executives who don’t offshore and don’t plan to (72 percent). If you note some overlap between the responses from the two groups, perhaps that’s because only 15 percent of all respondents think the backlash will last long — and only 5 percent of those who are offshoring today say public disapproval will cause them to cut back.

Comments from Executives Who Are Offshoring Now or Who Plan To

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If it is due to a shortage within a specific field I do not see the harm. However, if it truly reduces employment in the U.S. it should be taxed heavily.

As a manufacturer of low-tech products, we are unable to compete as more foreign sourced products come into our country. With the lower cost structure in China, we are currently fighting to survive despite trimming all costs including a 40 percent reduction in the workforce.

Until U.S. consumers are willing to pay a premium for “U.S. products,” “offshore outsourcing” will always be a consideration for companies to stay competitive in the global market. The “backlash” needs to be redefined and consumers need to be reeducated.

It’s cost driven. The public as consumers vote with their pocketbooks.

I believe the backlash is emotional, and the proposed solutions make matters worse. The solution is to make our economy more competitive, by reducing skyrocketing legal bills, health-care costs, feedstock costs, and costs of regulation.

It is unfortunately a lot of hype fueled by emotion, often by those who fail to understand the benefits of free trade.

Global economic efficiency, by definition, results in local economic disruption. Strong economies will assimilate the disruption, over time; global economic integration holds our best hope reducing global conflict.

Normal reaction one would expect in light of unemployment rates and current levels of patriotism related to September 11th and current Mideast activities.

It is politically fueled, but a serious issue nonetheless.

The allegations [regarding offshoring] are total BS and completely myopic. Unencumbered global trade, which includes services, is vital to a nation’s economic long-term growth and success. America’s economy is one of the strongest in the world due to its dynamism and churn. We cannot become Luddites or will suffer the backlash from other nations who will retaliate with their own tariffs etc. We must lead in free trade to encourage other nations to do the same.

Not based on facts, politically motivated. Job loss is due to productivity gains, not offshoring. It is actually improving the efficiency and bottom-lines of U.S. businesses. I don’t believe that it is in our country’s best interest to pay artificially inflated wages in order to save low-paying jobs.

Backlash is not based on analysis, just emotion. If we do not outsource offshore, other foreign companies will. The search is on to produce quality goods at the lowest delivered cost.

I do believe there is some legitimacy in that companies outsourcing services and their clients are avoiding payroll taxes. I believe that a tax should be imposed to the extent the service is being utilized in the U.S.

Typical of misinformation that arises in an election year. It is a threat to business profitability and a clear case needs to be put forth in support of offshore outsourcing. The backlash is understandable given the information conveyed to the general public; companies must do a better job of explaining the overall benefits as opposed to focusing on the cost save/shareholder value aspects.

Our auto industry customers indirectly dictate that we outsource, through constant demands for price givebacks (3 percent to 10 percent annually).

Backlash is a direct reaction to the lingering malaise in the expected employment increases. No such reaction was demonstrated during the NAFTA shipping of jobs when the overall economy was seemingly more productive.

It is only more significant now because white-collar workers are being affected. Many people did not really care when it affected blue-collar workers.

Constantly seeking lower costs is the product of capitalism, on which the U.S. is based. The U.S. needs to find greater markets for all our USA products to create a boost to the U.S. economy to benefit us all.

The focus should not be on outsourcing, but on how we can remain competitive.

The backlash is understandable, but in today’s global economy, companies survive by building and preserving competitive advantage. It’s hard to argue against a U.S. company gaining a competitive advantage in a global economy, and simultaneously improving the economy of the offshore nation it outsources to.

We are in the midst of the same debate that we had when manufacturing was outsourced to China 5 to 10 years ago; finally the economic principles will prevail over politicians and debates.

I have a real problem with encouraging the youth of America to strive for a college education and then outsource these positions offshore.

I believe the public is not always well informed. Much of the work being moved off shore is work that U.S. employees rate as unsatisfying, repetitive, and not contributing to career development.

I see it the same as the backlash that we witnessed in the U.S. when companies that had traditionally not laid off people started to do so in the late ’80s. At first it was looked at in a very negative manner but in the long run it was good for the economy.

Can understand negative reaction, but economic “theory” suggests that offshore outsourcing should make the economy better — keeps prices low and makes companies focus on higher-value-added businesses.

Unfortunately, we have to compete in a global market and if we don’t utilize offshoring another company will and put us out of business.

It is typical knee-jerk reaction to companies trying to control costs and remain competitive in a worldwide market.

Anyone who thinks that they can prevent jobs from moving offshore by wishing against it has their head in the sand. Only a competitive advantage could prevent that from happening.

Need to keep positions in the U.S.

Offshoring is just one of many supply-chain decisions. Should consumers stop buying products built overseas by non-U.S. workers? It is the same type of decision businesses have to make.

The backlash is appropriate. U.S. jobs will be lost and it will take a while before/if they are replaced. In the end, customer service will diminish as well.

Ridiculous. Politicians would like to try to isolate us from the inevitable tide of global economics — comparative advantage; the more vigorous the measures, the more damaging it will be to our economy in the long run.

It will continue until the U.S. economy including relative personal wealth) aligns itself with the rest of the world.

Current administration is doing a poor job of communicating situation to the public.

It’s ridiculous. The free market should dictate where work is performed — as it always has.

Competitive tool to reduce costs — although any reduction in our current employee base is not done without due consideration.

Comments from Executives Who Don’t Offshore and Don’t Plan To

This is like finding out tobacco use is harmful to one’s health. Foreign outsourcing didn’t just begin a month ago. It may be recently new to service sector jobs, but manufacturing has been doing it for decades.

It is similar to the arguments against NAFTA and other tariff reductions — people are unnecessarily afraid of losing jobs.

For a company to survive in a global economy, they must take advantage of all reasonable cost-reduction opportunities. If they don’t, their competitors will and the company will be at a competitive disadvantage.

In principle this is no different than buying imported products made in foreign countries. As long as the same or better service levels are maintained it is here to stay.

Short-sighted. Laws of comparative advantage still apply!

The backlash is real; quality, high paying jobs are being lost permanently.

This is all part of globalization. They have been teaching about these effects coming on in college economics classes for more than 20 years. There have been a number of events such as the cable laying for Internet development that have happened recently to accelerate the process, but history tells us that isolationism doesn’t work, and so people need to get used to the idea that we now have to work to stay ahead of the curve, and that involves change.

Unless and until companies can explain and show that there is some positive impact, the Democrats have a real issue to put fear into worker’s minds. They used a similar tactic which worked on Bush I when they threatened Medicare cuts if he was re-elected.

It will continue, but outsourcers will have to be more sensitive to the real costs of dislocation. Most successful outsourcers will do new functions there, not displacing current personnel.

The backlash is reflective of the current economic insecurity in the U.S. compounded by homeland insecurity.

Outsourcing has a legitimate place in American business, but the backlash will continue as long as we are seeing a net loss in U.S. jobs. Some of the savings received by the company must be passed on to employees who are losing their jobs as a result of outsourcing, possibly in job training, or enhanced severance packages.

I feel that if they put Americans out of work that I must support through taxes, then they should pay a hefty surcharge to offset my increase in taxes.

Political diatribe. Practice is not new. Political feel-good legislation is not the answer to this non-issue.

Companies engaged in offshoring have wrapped themselves in the cloak of the global economy to achieve short-term profitability at the expense of the trust and loyalty of their workforce.

If it leads to an increase in my taxes due to worker displacement, etc., then I believe the companies should pay a hefty surcharge for using offshore employees.

This backlash is narrow-minded, self-serving, isolationist focused, while we should be working in a global environment.

Caution should be used to determine compliance with laws and adherence to professional standards. In this information age, the confidentiality and integrity of information should be maintained at all times.

Politics driven. No basis in fact. A function of globalization.

Some of it is unavoidable, but we need to stop and think if demanding lower prices is really in our long-term best interests.

Did consider and evaluate but decided against the move. This is no different to when a lot manufacturing moved offshore several decades ago — it’s inevitable when the comparative advantage “stacks up.”

Until U.S. workers stop pricing themselves out of the market, it is not surprising that a company utilizes outsourcing to remain competitive.

I am against offshore outsourcing, as there are plenty of Americans who can be trained to do the same job and who need jobs. The problem with Americans is we all think we are owed a certain entitlement, we must earn lots of money! Perhaps what we should be doing is reeducate the Americans that if we all want high salaries, there is a price that comes with that, and that is sending our jobs to countries that are willing to earn less.

I support the backlash and would prefer to think we are smart enough with “Washington’s” help to “help our own” with jobs in this country for the economic strength of the U.S. population.

Caused by titanic costs of employment in USA. Workers are overtaxed for FICA $160 billion a year. Subsidize government and uninsured health care $400 billion a year. Can’t carry that burden in a global marketplace.

U.S. corporations need to help the American workforce first, not just the bottom line. America is known to be a great country, when you forget about your people it can be a downfall of this great nation.

The knee-jerk reaction with many high level execs is to send jobs overseas without trying to make domestic outsourcing work. These execs are not earning the money they make. Each job lost reduces consumer demand. Only business can create jobs, not government. Perhaps it will take a terrorist attack, crisis, or security breach in India or China to bring jobs back home.

Firms that only use offshore outsourcing to reduce costs will fail. Those using offshore outsourcing as part of improving the value chain for meeting customer’s needs will thrive.

If business needs require it, such as company presence in foreign country or cost savings, I approve it.

We lose the low-tech assembly jobs (clothing and trinkets) and gain the high tech assembly jobs (autos). We’re OK so long as we don’t outsource our defense and foreign-policy jobs.

Good politics, lousy economics.

It is a very short-term, narrow-minded view of employment. However, I think the long-term discussion should evolve around education and training — of current workers and how we prepare people for the workforce.

Offshoring will make the us more competitive in this world economy as it give the worker in the us the incentive to develop more technical and innovative skills.

I believe it is a Luddite reaction to a jobless recovery.

I agree with the backlash. How will the U.S. ever get out of its trade deficit? We need to stop this now.

If we are unable to react to the global markets we will find ourselves unable to compete.

Benedict Arnolds, yes. But survival is very important.

Backlash should lead to renewed commitment for training and education improvements for U.S. workforce.

You cannot compete globally unless you use global resources.

Companies need to do what is right for the investors and if that means moving jobs offshore to be competitive then they should.

Supply, demand, cost-effectiveness, and efficiency control outsourcing. Global communication vehicles allow global outsourcing.

Just as manufacturers have relocated plants, offshore outsourcing will eventually become routine.

I sympathize with the unemployed. I believe there will be long-term economic, worldwide benefits from offshore outsourcing. But there will be painful economic/lifestyle adjustments for the U.S. in the short term.

Companies have a responsibility to their shareholders to provide the best return to them. If this assists in a greater return they should do it.

Backlash is political not based on economic reality.

Outsourcing is a process change brought about as the result of economic growth. Change creates fear, and fear promotes irrational reactions. The current reaction to international outsourcing is the same reaction we have experienced in outsourcing to “right to work” states.

Much ado about nothing. Current political climate is ignoring global business environment.

It is a natural progression of world redistribution of value added wealth. It cannot be stopped.

Globalization of the economy is a fact, and offshore outsourcing is an integral part of that process. Backlash is a perfectly normal emotional response, but the fact of the matter is the jobs will disappear anyway if companies can not remain competitive.

Politicians and media stirring up the pot. This will blow over, and we’ll see no appreciable net change in tech jobs in the out years.

We have more of a “business decision” attitude in the U.S. vs. other countries where relationships are more important. Cost reductions are very hard for U.S. managers to ignore when making decisions.

I think businesses should do what’s best for business. In the long run, it’s better to have strong companies; that will lead to higher stock values and more jobs at home and abroad.

I believe in free markets — I believe the impact is uncertain.

It is the current version of the Luddite rebellion, and is irrational because the free flow of commerce will generally benefit the greatest number of people the most.

Companies outsourcing may have underestimated the total longer-term economic implications for them. Conversely, union organizations need to recognize the threat.

I feel that companies that are outsourcing should be required to notify their customers. Confidential or sensitive information (corporate or personal) should never be outsourced.

Companies have to be more efficient — offshoring can help. Profit pressure is always increasing.

We are a capitalist economy. Within reason and ethics, companies are well within their bounds to look for efficiencies; indeed, they are required to do so.

Believe it is a short-term concern driven by lagging economic situation and being exploited for political gain. In grand scheme of things, offshoring is not likely to significantly impact the U.S. job market one way or another. However, placing undue constraints on the outsourcing option could further dampen an economic recovery.

Most are politically motivated.

Believe it or not, we are being asked by other countries to bring jobs back to the U.S. because of the security and quality of work we can do that others can’t.

I don’t have any problem with companies seeking out the best-qualified, most economical resources. I do have a problem that we are not making the investment in our national infrastructure — including education — that ensures the domestic workforce is the best qualified and most efficient resource for U.S. and foreign companies.

Business is business. Save money! Make money! Outsourcing is OK, but remember customer service is #1!

The outsourcing will cause an overall reduction in the U.S. standard of living.

Over the course of history, the general populace has often tried to place the blame for economic downturns on groups of people (e.g. legal or illegal immigrants, religious, ethnic, or racial minorities, trade policies (free trade, NAFTA), or other external forces. This shows little understanding of the true economic forces at work. Offshore outsourcing is efficient and helps this country maintain our high standard of living. As for the backlash, this too shall pass!

An improving economy without a corresponding improvement in job opportunities has combined with the political/election-year climate to create what otherwise would not be an issue.

Offshoring is good for the consumer but will have long-term impact on workers in the USA because we will lose so many jobs. Loss of jobs will create a slowdown in our economy.

The backlash is a result of having a nearsighted view of the economic impact of losing jobs. Those opposing offshore outsourcing don’t believe in the long-term benefits of finding the lowest-cost alternative.

They are reacting to the competitive pressures of lower costs.

If we were able to phase out industrial and service-organized labor unions, companies would be able to compete more effectively and be in a better position to afford the skilled talent within the domestic marketplace!

The countries which are primary for offshore outsourcing are not the most stable. Major interruption in business could happen if political unrest occurs. The distance alone would be prohibitive in recouping equipment, personnel, etc.

Offshore outsourcing has become the latest tool in the continual development of cost-cutting methods in an attempt to meet the American demand of getting more for less from both the shareholder and consumer perspectives.

We deal with a global economy, so I believe that offshore issues will always be a fact of life and a necessary evil.

People’s concerns about the detrimental effect on the U.S. economy are well-founded. First it was the goods sector, now the services sector. What will we have left?

Another clear example of the public wanting their cake (more U.S. jobs with high wages), and eating it, too (low prices of goods or services).

The “backlash” is totally the result of political blather. The economic effects of outsourcing has already proven to INCREASE jobs in the U.S.!

It’s nothing more than politicians creating problems that contribute to their immediate needs.

Unfortunately, business is business, and with increased competition and decreasing profits, a lot of companies don’t have any other choice. Seems like the same concept as the “foreign” companies that use American workers.

If outsourcing makes economic sense, fine, but companies should have effective re-employment programs for displaced workers.

I believe that we should employ our own citizens before we contribute any more monies to foreign countries. There are other ways to save on expenses.

I do not believe that sending intellectual jobs offshore is positive for the U.S. If sending jobs offshore was a positive cumulative occurrence the U.K. would have continued to be the world’s economic power.

I understand that companies need to outsource offshore to be competitive and profitable but I also believe we are exploiting the workforce of other countries and ultimately hurting our workforce and economy.

It’s basic supply and demand. When a cheaper commodity supply exists, the market will move in that direction.

I strongly believe in a company’s right to make a profit and make decisions that improve profits. I also strongly believe in a consumer’s rights to demand certain things of the company it spends its money with. With the current world and U.S. problems, I believe there should be and will be significant pressure on us companies to bring these jobs back to the U.S.

We need more data in terms of benefits and costs of outsourcing, in terms of both quality and employment.

The public sector should NEVER outsource offshore because they are supported by onshore taxpayers. The private sector should be able to outsource.

It is understandable. Should not become an accepted practice. We would never consider for our company. We can increase profits other ways.

While offshore outsourcing will result in a loss of U.S. jobs over the “next few years” I believe that over a longer period it will have no effect.

I don’t think offshoring high-tech jobs will erode our competitive advantage. Overreaction by the media during an election year.

Companies are concerned about the bottom line. Henry Ford was concerned with his workers affording the product they made.

In order to improve their bottom line. No different then people going to Canada for prescription drugs.

I believe that most people do not understand macro-economics, but only what impact them on a micro level. It is difficult to present global facts that are meaningful to every worker and how it impacts themselves.

The backlash is caused by either people being uninformed (or misinformed), or by the Democrats and their constituencies trying to create a campaign issue.

What I have found is that the level of service is reduced. I have terminated my relationship with a number of accounts for poor service because of offshore support.

People are uneducated about the whole issue. Consequently the politicians are “making hay.”

The backlash is warranted. Global competitive advantage for U.S. companies ultimately comes as much from innovation as from being the low-cost producer of goods and services. Consequently, culture still counts.

This is nothing more than a political strategy to gain an advantage in the presidential election.

For years we pushed for a “Global Market.” We now have it. What we forgot was the “Global Economy” that should have accompanied it.

Free markets are to be encouraged. Offshore outsourcing is part of free marketing. Most of it is coming from IT professionals that are being outsourced to India. I am sorry to say that seems to be the result of high cost of IT development during the 1990s and the lack of hard dollar benefits to the company.

Unfortunately there is a market to support these companies and make it worth their while.

It’s shortsighted. Long-term competitiveness is not enhanced by artificially keeping work in a specific location.

This view misses the point that in a global economy, labor and capital are deployed where they can be used most efficiently. Offshoring frees U.S. resources to in turn pursue their most efficient use.

The backlash is highly emotional, not necessarily based in fact.

Overblown hyperbole and fear-driven hysteria. The U.S. economy has gone through many changes over the past century and has thrived. There is no reason to think that this current period of change will be any different.

A company must manage the tensions between sound fiscal and economic policy (including sound macroeconomic policy like offshoring) with public perception and reactions. This can be done by encouraging facts representing the other side to those posited causing emotional reaction, through open discussion of the issues with employees, suppliers, and shareholders, and through living what (one hopes) is a culture of concern for the stakeholders.

In a nutshell, this too shall pass.

I believe that offshoring is the right decision. Companies should always strive to be more efficient. It will benefit the U.S. and the world.

It is needed and necessary. We are fast being eliminated as qualified candidates for high technology!

I agree with the backlash to a point in that it does displace certain skilled jobs in the U.S., and if you are one of these people displaced, it can devastate your livelihood and family. However, a certain amount of offshore outsourcing is and should be a fact of life, but U.S. companies and the U.S. government should work to protect a certain amount of U.S. jobs while also outsourcing to lower cost (let’s say a 50/50 sharing ratio between the two options). The government should provide companies some incentives to make such a strategy palatable.

I believe we need to move jobs oversees only if absolutely necessary to reduce cost and maintain a company’s viability.

It is a complex issue and effects on customer/community relations must be taken into effect. The stagnant economy is a major factor. Also, efficiency improvements have contributed to the issue by decreasing the number of jobs required to perform a specific unit of production.

There is a general lack of understanding of the costs/benefits of this practice. Backlash is unwarranted. Economy demands moving work to the highest-value location — U.S. needs to re-train workforce to deliver even higher-value-added jobs.

The public has not figured out yet that multinational corporations are not “U.S. companies” anymore than they are loyal to any other nation. They have loyalty to their stockholders, affiliates, and alliances only. This is a point that multinational companies are afraid to sell to the public.