Re: Don't believe the offshore hype?

Subject: Re: Don't believe the offshore hype?
From: "Chuck Martin" <cm -at- writeforyou -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com>
Date: Wed, 10 Mar 2004 12:01:34 -0800

"Richard G. Combs" <richard -dot- combs -at- voyanttech -dot- com> wrote in message
news:231672 -at- techwr-l -dot- -dot- -dot-
> A full explanation would require many pages (trust me, I have an Econ.
> degree ;-) ), but here's a highly simplified example. Let's say I make
> widgets, and I can increase my profit from $1 million dollars to $2
> per $10 million (retail value) worth of widgets by <pick one: outsourcing,
> automating, waving a magic wand>. What will I do with the $1 million I've
> saved?
> Assuming I have a lick of sense, I'll invest it in producing something at
> least as valuable as -- probably more valuable than -- using it to produce
> more widgets. I wouldn't invest in something *less* valuable than widgets
> (mud pies or french fries, for instance) -- that would be stupid.
So here's the question (and I took only Econ 100, macro and micro combined,
which was still very enlightening): Instead of investing in producing
something at least as valuable, what happens when you take those savings and
distribute them to the company's top echelon officers? No reinvestment in
the company, no distribution to stockholders, no rewards for the
productivity and innovation of existing employees.

I ask because of the difference between theory (your statements) and reality
(or at least the perceived reality of what many companies are actually doing
with those savings). Socialism (from each according to his abilities, to
each according to his needs) works in theory, but in practice, with real
people and their strengths and weaknesses involved, it's an utter failure.

In practice, the outshoring savings seem to be turning out less that
advocated, in part because the cost of management of remote groups turns out
to be higher than anticipated (and why wasn't that higher cost anticipated?)
and in part because many areas where the outsourcing is occurring are
experiencing Silicon Valley-ization: increasing worker skills and increasing
opportunities leading to jop hopping (making it tough to retain workers) and
spiraling wages. How long before the cost savings are nullified, and
perhaps even reversed?

Chuck Martin
User Assistance & Experience Engineer
twriter "at" sonic "dot" net

"I see in your eyes the same fear that would take the heart of me. The day
may come when the courage of Men fail, when we forsake our friends and
break all bonds of fellowship. But it is not this day! This day, we fight!"
- Aragorn

"All you have to decide is what to do with the time that is given you."
- Gandalf


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