As Americans struggle to figure out how to stimulate the economy, we are seeing a rising sentiment against outsourcing. So, I wanted to take this opportunity to share my thoughts, though many of these points have been made by others in the last 10 to 15 years.
Globalization of services is making significant positive contributions to global economies and to the buying power of the USA, India, China, Mexico, Brazil and other countries. Still, outsourcing is seen as an alarming issue for many government officials, media, corporations and individuals. As a participant in the industry, I feel it is important to provide a balanced view to the debate over the Globalization of services.
It is always unfortunate when individuals lose their jobs. It is even more of a concern when the job loss occurs in a down economy. The reality is that this trend is real, irreversible and another step in the Globalization of the American and global economy. In the short term, it will continue to present challenges to industry, government and individual employees.
Yet, it is also important to note that clients are not sending all jobs offshore. They are carefully evaluating what jobs are best suited for each global location.
As companies go through this difficult decision, they are also creating programmes to minimise the short-term pain for their employees. They are offering their employees reeducation programmes, severance packages and outplacement services. As an advisor to these companies, I see companies looking at innovative solutions to help manage this difficult personal and corporate change.
While this will continue to be a controversial and emotional debate, it is important to keep in mind that the re-distribution of resources to efficient global locations results in freeing up of capital, lowered costs for consumers and new opportunities for investments. Protectionism hampers innovation and cripples growth, which in turn can lead to higher unemployment. The failure to innovate is to cede technological leadership and, ultimately, economic strength.
Globalization is a structural evolution of the American and global economy. America is part of a global economy and American companies will flourish by staying competitive. This requires them to leverage resources and opportunities globally. This is helping American companies stay competitive and thus enhance shareholder value and stay healthy. This enables them to not only save jobs but also create new jobs by expansion and new service or product introduction.
Many companies that do not leverage this Globalization strategy have filed for bankruptcy and as a result lost even more jobs. These are companies that may never have the opportunity to create new jobs or provide a return to their shareholders.
As the US population ages, there will be a shortage of resources. In fact, it is projected that at current productivity levels, America will face a shortage of almost 15 million workers in the year 2015. Also, over the next 12 years, more jobs will be lost to productivity and technology rather than Globalization. This trend can currently be seen in the Chinese manufacturing industry. They lost 15% of their manufacturing jobs from 1995 to 2002 due to an increase in worker productivity and technological advances.
What can America do to create new jobs or keep jobs?
Expand the R&D Tax Credit: Since first introduced more than twenty years ago, the R&D tax credit has helped stimulate innovation and kept high-skill, high-wage jobs in the United States. Expand the R&D tax credit to reward further the risk-taking and innovation that keep the American economy growing.
Increase Federal Spending on Research: Research funding in the physical sciences and engineering as a percentage of GDP has declined since 1985 by nearly one-third. Reverse this trend and dramatically increase federal spending on basic research. The money spent will come back to many times over in the creation of new jobs in new industries making products yet to be invented. Let’s have a Manhattan kind of project along with a stable revenue model for clean energy.
Pass the JOBS Act: The JOBS Act provides a tax cut for all companies manufacturing products in the US It also contains a variety of provisions to help US companies compete more effectively against their foreign rivals.
Deal with Rising Health Expenses: Offer small employer tax credits, funding for employer-based group purchasing pools, increased funding for high-risk pools, build on Medicaid and the State Children’s Health Insurance Program, and permit a Medicare buy-in for the near-elderly.
Enforce Trade Agreements: Keeping markets open and opening new markets for US goods and services will also help increase employment in America. Push for better enforcement of our existing trade agreements, and for negotiating trade agreements with countries that offer lucrative markets where US companies could increase their sales.
Support Lifelong Education: Education provides the skills necessary to unleash Americans’ creativity and helps prepare them for the jobs of the future. Improve, consolidate, and expand education tax incentives; to increase scholarships for engineering students; to fund the No Child Left Behind Act fully; and to support community colleges.
Trade Adjustment Assistance: TAA has helped thousands of manufacturing workers get retraining, keep their health insurance, and make a new start. Improve TAA and expand it to cover service workers who lose their jobs to offshoring. People should get retraining whether they work in services or manufacturing. Workers, employers, and the American economy will benefit when the workers are equipped with the skills they need to fill jobs in growing industries.
Many of the ideas shared here have been championed by American Senators and Congressmen, but we also need the outsourcing industry and professionals to rally to support the above. Speak out and make your voice known, that global trade is necessary to global development and enhanced livelihoods globally!
This article originally appeared on “The Outsourcing“