Is Outsourcing Just a Scam to Get Cheap Labor?

A classic confusion about outsourcing is the belief that its economies derive from "cheap labor," a notion which evokes images of the 19th and early 20th century sweat shops that characterized the industrial revolution. Yes, outsourcing arrangements offer cheap labor, but the savings usually come from the low cost of living in the region where labor is outsourced. In fact, the most valuable export of the typical outsourcing company is a low cost of living!

Over time, the flow of capital into any area will lead to the development of infrastructure. Productivity will rise and with it wages. Outsourcers eventually lose the comparative advantage of a low cost of living, as the local economy expands and drives up demand for labor and other economic resources, like real estate. People must then specialize and find a more narrow market niche in which to sell their labor at a higher price. This is the natural development path for any economy.

Do you ever give gifts to people in need? If so, have you ever had the privileged opportunity to give someone the gift of a job? Sometimes we get so caught up in symbolisms that we forget what helps real people find a real means of bettering their lives. A gift will rarely do as much as a job to better someone's professional prospects.

Orizaba is a place where young software engineers have had difficulty finding work in the past. We have seen electrical engineers working in banks greeting people at the door, and talented programmers taking jobs as system administrators or network installation technicians, because they cannot find real programming work.

Thanks to broadband internet, that is now changing. For the first time in this region's history, software engineering graduates can seek meaningful employment in their home town, and live and work close to their families, rather than move to large overcrowded cities like Mexico City or Monterrey.

We are convinced that even the IT workers in the United States benefit from this trend, because the abundance of inexpensive programming labor has greatly increased how much IT service people are willing to buy. We are observing a phenomenon similar to what occurred back in the 1980s when the UNIX operating system made systems programming accessible to anyone who could buy a UNIX book in a B.Dalton book store, whereas before it was the province of a tiny programming elite. Did programming employment diminish or the wages of experts collapse because of the flood of UNIX professionals into the IT labor markets? Not at all!

When computers cost a million dollars and only a few thousand elite programmers knew how to program them, needless to say, not many people used computers. But when computing labor became accessible to a wider group of businesses who wanted to be IT consumers, experts did not cease to exist. They simply specialized and in some cases demanded even higher fees. Programmers in the United States may have to adjust to shifts in IT labor markets. Some sorts of programming that we used to do in the United States are now mostly outsourced. But programming is in constant evolution anyway because of the march of technology, and because cheaper programming costs mean that more people use programmers, ultimately IT professionals in the United States will benefit from the opening of their profession to people outside our borders.

EtherPros invites you to consider carefully whether outsourcing is your best option. It is a business decision. But if you decide that outsourcing is the best option for your business, perhaps you will be interested to learn that you are helping to give some young and talented engineers more choices about where they live and how they work, and on their behalf, we would like to say, "Thankyou!"

We hope you will get the chance to know our team members personally and ask them yourselves what they think about outsourcing! They are grateful for your business. And so are we!