Reply #37: In The End, IT Outsourcing Will Be A Collasal Failure [View All]

[Yavin4]

Look at the Nasdaq today. After three years of aggressive outsourcing by major American IT companies, the Nasdaq is still well below its average highs in the boom years of the 1990s. Why? Because increased IT outsourcing has indeed lead to lower wages, but it has also lead to lower overall IT sales.

For every IT job sent to India, that has meant lost IT sales to Americans. A corporation that outsources it IT functionality also outsources buying the latest upgrades, buying it training courses for their employees, etc. Instead, they just order their functinality from overseas. The person that orders out for dinner every night is not going to buy groceries, frying pans, or cookbooks.

Finally, outsourcing WILL NOT raise the standard of living of the world's poor. After a decade of globalized free trade deals, Mexico is still largely a poor nation where many of its citizens flee to the U.S. looking for work. Neat little academic economic theories about globalization are meeting the harsh realities that it's more about seeing a hand full of global elite capitalist get even richer and nothing else.