Why do companies send jobs overseas?

One of the biggest and most aggravating issues with outsourcing is all of the tech support and customer support jobs that have been sent over seas, mostly to India.
It irritates the hell out of me to have to call a support number when I'm having problems with a cell phone or a PC and the call takes several minutes more than it should because you cant understand a damn word any of them say.
I think sprint has finally brought some of those jobs back to the states, thank god.
A few months ago I was forced to use Earthlink for my ISP and when I called, due to numerous issues withe the service, I would ALWAYS get someone in India and the problem would NEVER be resolved..
One of the many reasons this is done is to make the company more money by paying these employees less money than they could in the US..

Companies need to wise up on what to outsource.

At the moment they are outsourcing anything they can to save money in the short term, which is a stupid idea in the long run if the work returned is sub-par.

I use Indian web developers for my website and have to check the grammar and spelling etc. However the coding and software setup is better than anything that I could get in the western world.

Cost of web development in the UK: £1000 for web portal quoted
Cost in India : £100.

Sure I had to go through eliminating spelling and grammar mistakes, but it was worth it for the £900 saved.

There are some things which are unwise to outsource though. For example, when you want something to do with language or culture it is best to keep it as local as possible because local people understand the issues innately.

Outsourcing callcentre work is ridiculous. Ive dealt with the Indian staff, who have no idea what they are helping you with.

That said, its a damn good idea to outsource what is known as KPO (Knowledge processing outsourcing). i.e send away raw data for the indians to sit there and calculate and analyse in excel and they send it back the next day all done... very accurate and very cheap.

Because 1 Canadian dollar = 38.96346 Indian Rupees. Some for US dollars. Not to mention they pay a lower wage in India because the cost of living is different. In India the idea is that not everyone wants an LCD screen or the latest XBOX 360 games so their economy functions differently. So basically companies can hire a dozen workers in India for the same price it costs to hire 1 or 2 people here. North American companies are greedy and hence they dont care about the well being of their citizens, only the dollars that are saved.
The company i work for has cut thousands of jobs in the last 5 years and sent all the work to, you guessed it, India. And while i dont discriminate on people in India and China having access to good jobs, i am quite angered by the fact that large companies in North America care very little about the people who have worked hard to make their company what it is today.

Anyways since the company i work for has sent thousands of jobs to India we have seen a 50% increase in the level of frustration of our customers and a 20% loss of business. Its not so much the language and the cultural barriers but more or less the fact that the jobs that were cut here were occupied by 15 - 25 year veterans of their field who were paid well and were happy and replaced with underpaid individuals with no job experience who live in a country where it is hard to make a decent living.

reply to post by 44soulslayer

There are some things which are unwise to outsource though. For example, when you want something to do with language or culture it is best to keep it as local as possible because local people understand the issues innately.

Outsourcing callcentre work is ridiculous. Ive dealt with the Indian staff, who have no idea what they are helping you with.

This is the main problem our customers have reported and the number 1 reason that we are reportedly losing our customer base. Yet our company has no plans to correct this.

Outsourcing is a continuation of, and a natural progression from the craze of 'streamlining' the workforce via redundancy that was prevalent in the 90s. There's however a fundamental problem with the whole culture of increasing profits by indulging in the aforementioned.

Yes, in the short term outsourcing will increase the profits of a company. If your labour costs are a 10th what they were, provided your customers keep on buying and pay the same price, you can't help but make more money.

Where it all falls down is in the medium to long-term.

Why?

Well, take a simple example. Company A and company B both employ workers in the US or UK. They pay them good wages and as a consqequence Company A's workers can buy from Company B and pay a good price, and vice versa

Suddenly Company A decides it wants to increase it's profits, so sacks it's US/UK workforce and outsources. As long as Company B's workers are earning good money and keep on buying Company A's stuff company A will make more money (cheaper production costs, same retail price.

However, Company B's customers (A's sacked workforce) suddenly find they have no income (or a reduced one), so they don't buy Company B's products. Company B sees a reduced profit and decided to sack it's workforce and outsource too.

So now you have Company A & B both producing stuff cheaper, but their former customers can't afford to buy them at the old price (no jobs). Now we start getting into companies slashing prices, to attract customers who are either unemployed or earning a pittance....or the alternative... They retain their old customer base who are borrowing money like mad to retain their old high income lifestyles. Now, picture thousands, tens of thousands of companies all behaving like company A & B

This is where we are today... Everyone in low earning, non-productive jobs, importing everything from abroad, and borrowing money like mad to afford those imports.

All this because a few people wanted to make short-term profits... and short term they will be. A combination of credit crunches, unemployed customers, debased currencies, and low-wage earners in India and China who will soon start demanding more wages and better conditions ANYWAY.

If companies had kept a balance... Paid good wages, had a highly skilled and well-off workforce, and accepted modest profits year in-year out, things could have been SO DIFFERENT!

[edit on 1/4/2008 by Dagar]

Originally posted by BlackProjects
You have all mised the boat........Companies outsource to avoid pollution/EHS/health care/retirement/various laws/taxes to pad the pocket of the CEO pretending quality did not change.

Doh! Are you right on this! A big "thank you", BlackProjects, for reminding us. Companies fleeing to avoid responsibility to the environment and health standards. Go poop in someone else's back yard, go weaken someone else's workers.
All the NAFTA, etc, outsourcing, was sold as not only good for the American economy and worker, but good for the workers and economy of the other countries. To bring them up to American standards. I guess we had to lower ours in order for theirs to look better.

Go to Progressive Policy Institute for more info on a way out of this mess.

I guess the thing that irks me is typically the companies buy/setup/equip buildings overseas. Actually a lot of disciplines involved in that planning and setup. I say let them do it all themselves then bid competitively for work. That is a big difference between being setup and trained using lessons learned. Usually these experts have to nurse maid and stay in the companies for extended periods of time. I know friends who have had such roles. Everyone says if they considered all the time and money to setup and train employees many would not..payback periods usually actually take over 2 years. Sure some IT type jobs don't take as much as manufacturing to get going.

Check this link out.
www.illwillpress.com...

Threads like this PISS ME OFF!!! Its simple economics 101.... competitive advantages make for different specializations. America has a surplus of capital, and less developed countries have a surplus of labor. When each country specializes in what they have an advantage at.

America: Capital intensive industries like biotech, military/defense, banking, high-tech manufacturing, etc
India, China, etc: Low tech manufacturing, simple things that don't take too much thought or human capital

There are LOTS of jobs in America that go unfilled (and pay REALLY WELL) such as precision manufacturing jobs, auto technicians, computer/web developers, etc. We just hear about the ones that aren't highly skilled going overseas because those are the only jobs that we are "losing". Over the long run the economy adjusts and consumers end up getting better/cheaper/more products, and everyone wins with free trade.

The reason people talk about losing jobs is because they only care about the short run consequences. Protectionism is a horrible policy that simply negates the effects of free trade and makes the consumers pay more for stuff. People don't know economics, its pretty sad

One thing most americans do not realise,is that they emulate their leaders,idolize those who are rich,and do these types of things to get that way...believe that they need what they want,but really don't want to work for it..that is what is wrong with america.
There is lots more,but most wouldn't be able to comprehend it.
We let it become this way because we are a country of ignoramusses.
Just pop a beer and go watch a goddamned game on tv or something.

Originally posted by steve22
Threads like this PISS ME OFF!!! Its simple economics 101....

CEOs need to get pissed off and stop the propaganda coming from the media, Hollywood, and the democrats, or at least counteract the left propaganda machine.

The left is poisoning the minds of Americans, which is easy to do because most people are clueless about economics 101. Economics might as well be rocket science, few get it, and even those in the Federal Reserve don’t seem to get it.

Capitalism is under attack big time yet few seem to care or notice.

Originally posted by steve22
Threads like this PISS ME OFF!!! Its simple economics 101.... competitive advantages make for different specializations. America has a surplus of capital, and less developed countries have a surplus of labor. When each country specializes in what they have an advantage at.

America: Capital intensive industries like biotech, military/defense, banking, high-tech manufacturing, etc
India, China, etc: Low tech manufacturing, simple things that don't take too much thought or human capital

There are LOTS of jobs in America that go unfilled (and pay REALLY WELL) such as precision manufacturing jobs, auto technicians, computer/web developers, etc. We just hear about the ones that aren't highly skilled going overseas because those are the only jobs that we are "losing". Over the long run the economy adjusts and consumers end up getting better/cheaper/more products, and everyone wins with free trade.

The reason people talk about losing jobs is because they only care about the short run consequences. Protectionism is a horrible policy that simply negates the effects of free trade and makes the consumers pay more for stuff. People don't know economics, its pretty sad

That is exactly right. If you need a job, come to Texas. We cannot go out to eat because there are not enough staff to cover the restaurants. I run a call center. I will pay you 9.50 after 60 days if you speak spanish. The oilfield starts you at 15 an hour. The refinery that exploded has about 2000 workers they have brought in from all over the world and they need more. When we remodeled our call center, we couldn't find a contractor to take the 1 million dollar bid. 3 months, 1 million dollars (with about 500k in overhead if you do it smart). So we brought them in from outside the state. The labor came from all over the united states for that project.

There are so many jobs that it is hurting the people of the communities. My town isn't the only one, either. If you move out of your house, you will not find another and may have to move to another state. There is a HUGE housing crunch. To make matters worse locally, the refinery screwed up a bunch of houses. My house has a severely comprimised foundation and i will likely have to demolish (it belongs to my grandmothers estate). I am lucky that my family does rental properties, as i have a really nice home that we are almost done renovating that i can move into. Not everyone else is so lucky.

The refinery has bought every trailer park in the area (making many new local millionaires), and they are paying 1,000 a month for each bedroom in your house (a 3 bedroom normally rents for 600 a month....now we make 3k a month on it, for the time being). How many "regular" folks can compete with that price? Plus, the refinery guarantees repairs and cleaning on the hosues when they move out.

I don't see the negative impact of outsourcing our jobs. We have gotten so much more complex, and invented so many jobs, that we lack the workforce to fill them all. If you can't find a job where you live, move. Isn't that what we said about Ethiopia? LOL. Seriously....move where there is work, or elect officials who will stimulate your economy (at the state and local level).

[edit on 1-4-2008 by bigfatfurrytexan]

Originally posted by gdeed

Originally posted by steve22
Threads like this PISS ME OFF!!! Its simple economics 101....

CEOs need to get pissed off and stop the propaganda coming from the media, Hollywood, and the democrats, or at least counteract the left propaganda machine.

The left is poisoning the minds of Americans, which is easy to do because most people are clueless about economics 101. Economics might as well be rocket science, few get it, and even those in the Federal Reserve don’t seem to get it.

Capitalism is under attack big time yet few seem to care or notice.

you're just as ignorant saying its all the "propaganda machine" of the left. The right is just as guilty, they also spit worthless nonsense like "America is losing jobs to overseas, we need to protect out industries!".

look at McCain and Bush, all talking about how we need more protectionism in the world and giving handouts to inefficient businesses. Capitalism is based on a dog-eat-dog mentality where the inefficient businesses don't survive. As soon as we get rid of trade barriers, the better off we will be.

Well, obviously fear mongering has benefitted both sides of the aisle. To reduce this to partisanship is completely counterproductive and begins a downward spiral into embracing ignorance.

Because its cheaper and they can do the exact same thing. If they invest billions in a company they want it to grow a lot faster, thus using industries from oversea's. My dad works for Target and they are now having meetings over an intercom projector thing. He solves problems to make it harder for people to fraud. Im not sure if thats exactly what they talk about to the people in India though.