Global executives say yes to outsourcing

Rediff ^ | March 06, 2004 | Debjoy Sengupta

[yonif]

A survey of 7,300 senior executives around the world by consultant McKinsey Co found that four out of five executives think outsourcing is good for the global economy.

Split continent-wise, the ratio was the same for executives in Europe, Asia and the US, the survey, released on Thursday, said.

When queried on the implications of outsourcing on their own businesses, 70 per cent of the Europeans said it's good, 97 per cent of Indians said the same, as did 86 per cent of Chinese.

But the figure falls in America, which is home to the world's most globalised companies -- only 58 per cent of the US executives were positive on the development.

On the global economy, the executives were cautiously optimistic, and most of them thought it was healthier than it was six months ago, but they saw the improvement levelling off by mid-2004.

They viewed Asia as the region with the most promising growth prospects for 2004.

Executives of smaller companies said hunting for talent and capital were their main worries, while larger ones were concerned that consumers would rein in spending.

They also felt policies on foreign direct investment were critical, especially to executives in developing economies.

The survey, conducted in January, polled leaders from a wide range of industries and regions to develop a worldwide barometer of executive sentiment on economic and business trends.

About 12 per cent those surveyed were chief executives from 115 countries.

A confidence index derived from the survey registered a level of 67 on a scale of 100, where 50 or more indicated optimism. Executives in developing markets had a confidence index of 71, indicating they were more bullish than the overall survey average.

Executives in China and India were more optimistic than their peers in the rest of the world, with 87 per cent and 80 per cent, respectively, predicting the economic climate will get even better by July. Of the other executives surveyed, 73 per cent shared that sentiment.

Although executives were optimistic, they didn't see an easy road ahead. In most regions, economy was the top concern for the executives.

The exception was from the emerging markets, where executives were focussed on the search for talent.

Beyond the economy, executives of larger companies worried about the sustainability of consumer spending -- considered the lifeline that kept the recent US economic downturn from becoming still worse -- followed by the competition for talent.

Many also listed currency fluctuations, pricing, and global competition as key concerns.

Executives from smaller companies, however, believed that hiring and retaining talent was the second most important concern. Access to capital, which executives at larger companies hardly notice, comes in third.

Perhaps not surprisingly, executives in developing markets were more bullish than are their counterparts in developed ones about the benefits, for companies and the world economy, of outsourcing manufacturing and business processes to low-wage countries.

[Jeff Chandler]

"Outsourcing" seems to be the latest buzzword. I wonder why?

[Mr. K]

Outsourcing is losing its luster. At first there was a talented work force in India willing to work for half (or less) than an american would work for. Then all the good people were used up and the teachers found they could make a bundle more... now we are seeing more and more mediocre work, and the language and time barriers are considerable.

[McGavin999]

American companies continue outsourcing they are outsourcing the consumers ability to purchase their goods and services. I can't figure out why they don't see this. What good does it do to have cheap labor when nobody will buy your product?

[BikePacker]

Those in charge (not politically - REALLY) have decided that the best long range plan is that of economic equilibrium.

They believe that trade will trump totalitarianism, and make the world a safer place to turn a buck.

Of course, America's middle class will be leveraged in the process.

[stylin19a]

The question posed to the executives isn't clear.

The numbers show who is giving and who is getting.
Those outsourced "to" are crazy for it. Those outsourced "from" aren't as enthusiastic about it.

I'm absolutley shocked.

[Clintonfatigued]

Of course, the executives support this. They are the elite, born of elite parents. They think they're superior to everyone else. In fact, most of the elite have more in common with elites from other countries than with their own country-men. No wonder they believe in globalism.

[Texas_Dawg]

Of course, America's middle class will be leveraged in the process.

Because most of that middle class will become much wealthier. As has been the trend in the US for the past few decades.

[Texas_Dawg]

Of course, the executives support this. They are the elite, born of elite parents. They think they're superior to everyone else. In fact, most of the elite have more in common with elites from other countries than with their own country-men. No wonder they believe in globalism.

Could you possibly be more Marxist? I know you will say you are not, but what your post is 100%, textbook Marxism. Period.

[TopQuark]

Of course, the executives support this. They are the elite, born of elite parents. They think they're superior to everyone else. In fact, most of the elite have more in common with elites from other countries than with their own country-men.

Straight from the Communist Manifesto.

Congratulations, Comprade! Now why on earth do you fancy yourself being a conservative?

[Clintonfatigued]

You're right about one thing, I (truthfully) am not a Marxist. But while you call the remarks Marxist, you didn't say they were untrue. Have you read "The Wealth of Nations" by Adam Smith, an articulate book of the marketplace? Smith's book is (rightly) regarded as the ultimate source for the virtues of market economics, private enterprise, and capitalism. But he never sanctioned anything like this. In fact, he was totally against monopolies and transnational businesses, as detrimental to the populace. Do you want your income taxes being prepared by a slave-wage foreigner? Do you want your medical records being processed by a slave-wage foreigner? Do you want to flip burgers for minimum wage because jobs at your level are being filled in a third world ogilarchy? I have a news flash for you: Free trade is not free.

[Texas_Dawg]

That's a nice little rant.

Unfortunately it has nothing to do with reality.

Free trade is free.

You absolutely are a Marxist. Straight AFL-CIO Marxist rhetoric. Mindsets like yours, completely bankrupt of how free market economics works, are a serious threat to American prosperity.

[BikePacker]

completely bankrupt of how free market economics works,

Actually it is you who seems to be clueless.

The previous poster was spot-on regarding Adam Smith's warnings.

[Texas_Dawg]

Actually it is you who seems to be clueless. The previous poster was spot-on regarding Adam Smith's warnings.

Adam Smith was wrong. Free trade has been great for America.

[hedgetrimmer]

Free trade is free.

You've never posted one fact that shows this to be true. So go ahead, don't post the definition of free trade, but tell us where one actual trade agreement between two businesses has been made without the oversight of a "trade minister", or a treaty that imposes welfare requirements to foreign nations by American taxpayers, or the insurance or incentives also paid for by the American taxpayer through OPIC, the INF, the Export Import bank.

[Monty22]

Why do I get a feeling that Texas_Dawg is runs an outsourcing agency? The way he talks about it is nuts.

[TXBSAFH]

A race to the bottom with the great walmart of china in the lead.

[TXBSAFH]

The social costs of free trade are costing us far more then we save on cheap crud from india and china.

[Texas_Dawg]

You've never posted one fact that shows this to be true. So go ahead, don't post the definition of free trade, but tell us where one actual trade agreement between two businesses has been made without the oversight of a "trade minister", or a treaty that imposes welfare requirements to foreign nations by American taxpayers, or the insurance or incentives also paid for by the American taxpayer through OPIC, the INF, the Export Import bank.

Free trade is the removal of restrictions on trade. Capitalism. Capitalism works. If you don't know this, there is nothing I will ever be able to do to convince you. But you absolutely are not a conservative. You are an anti-business socialist. You've demonstrated this repeatedly.

[Texas_Dawg]

The social costs of free trade are costing us far more then we save on cheap crud from india and china.

Pure Marxism, fwiw.