[I, Cringley]: If a U.S. employer said out loud, “Gosh, we have a lot of 50-something engineers who are going to kill us with their retirement benefits so we’d better get rid of a few thousand,” they would be violating a long list of labor and civil rights laws.æ But if they say, “Our cost of doing business in the U.S. is too high, so we’ll be moving a few thousand jobs to India,” that’s just fine — even though it means exactly the same thing.
But aside from branding ‘offshoring’ as covert age discrimination, Cringely sees it as bad business:
IBM and a number of other companies will send jobs to India.æ Profits will rise, but no head counts will drop.æ Head count will rise, in fact, because the heads are so much cheaper.æ Productivity for these offshoring companies will not rise.æ It will fall…. Power and efficiency are in conflict here….
A larger question here, aside from the direct impact on companies that Cringely flags, is the relationship between micro and macro considerations here. The quest for ever lower labor costs may make competitive sense for individual companies (at least those that view labor as an expense rather than an investment), but what happens as it cuts the purchasing power of the US workforce? What happens as China evolves from a low cost labor haven into a serious technical competitor than can give US (and European) companies a run for their money?
The signs are already showing. Tech companies that moved manufacturing to China to cut labor costs 85% are now finding, to their surprise, quality of engineers, plants and infrasturcture comparable to any in the world.]
