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Current Affairs

Offshoring

Steve Lohr reports in today’s New York Times on the offshore outsourcing of technology jobs.

Is the offshore outsourcing of technology jobs a cataclysmic jolt or a natural evolution of the economy? The short answer is that the trend is real, irreversible and another step in the globalization of the American economy. It does present a challenge to industry, government and individual workers. But the shifting of some technology jobs abroad fits into a well-worn historical pattern of economic change and adjustment in the United States.

Here’s another perspective: an interview of CK Prahalad from India’s Economic Times.

It’s fascinating how all of this globalization and offshoring works its way through the economy. The farm belt is suddenly booming — according to a Wall St. Journal front page article last week — largely driven by exports of corn and other grains to China. Similarly, the steel industry is doing well — but not why you’d expect. The part of the industry doing well is shipping scrap steel to China. And, of course, there have been the recent examples of call centers offshored delivering lousy service quality — and being pulled back until things could get tended to. And then, of course, there’s Wal-Mart — often blamed for its relentless focus on costs and the impact that has on American suppliers and their workers.

Meanwhile, here in California, we’re about to enter a new era where the state will impose a minimum patient:nurse ratio in California hospitals — further driving up the costs of health care in the Golden State and weakening its global competitive position even further.

Health care is one of those industries that could really benefit from a provider driven to lower costs ala Wal-Mart! Unfortunately, the economies associated with globalization and offshoring don’t easily apply to health care costs — unless you’re talking about importing prescription drugs from Canada!

Meanwhile, I had to chuckle at today’s story in India’s Economic Times: Now, China, Inc. to outsource to India. The Economic Times, which claims to be the world’s second largest business newspaper, has a section dedicated to coverage of business process outsourcing which is subtitled “How India, Inc. is cashing in.”

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