Is offshore outsourcing good or bad for US? That is the question of the century. Whether good or bad one thing everyone seems to be sure is that outsourcing is inevitable. Yet another question is whether offshore outsourcing destined to be the device that precipitates the next historically inevitable shift of economic power? Unless America's leaders take a step back and look at the bigger picture --- yes. As the line between international and local business blurs, it's becoming increasingly important to understand the various ways in which cultural differences affect business practices.
In 1980, Geert Hofstede, a Swedish industrial organizational psychologist, studied cross-cultural business practices. He identified two elements that can now be related to the recent explosion of outsourcing. One element concerns patterns of individualism vs. collectivism in business thinking. The other involves short-term vs. long-term perspectives in decision making.
According to Hofstede's findings, business practices in India and China can be described as collectivist in thinking and long-term in perspective. That is, they emphasize the community over the individual and are patient in obtaining desired results.
The United States, on the other hand, exhibits a highly individualistic business culture and is strongly oriented to short-term thinking.
Given the different nature of their business cultures from ours, India and China are well-bred to exploit the outsourcing explosion, much to our detriment.
They could, for instance, choose to keep their currency low for years, to capture more business from U.S. shores. Then, after a strict dependency is created, they could simply raise the value of their currency. What would this do? Outsourcing wouldn't be as viable anymore, but we would be left with no easy way out.
After so many years of impossible-to-match competition through outsourcing, enrollment in American science and engineering programs is likely to fall, either directly from the competition or indirectly from wage depressions spurred by the competition.
In our highly individualistic society, our leaders are being nearsighted. They are looking for immediate gratification through short-term economic gains. And they are applying faulty logic to the dilemma of outsourcing.
Bill Gates and George W. Bush have recently called for relaxed restrictions on H1-B visas. These grant non-immigrant employees one- to six-year stints in the United States to work for sponsoring companies. After their visas expire, they are forced to leave for at least a year before returning --- a condition that is little more than an invitation to invest the money earned here in foreign economies. Worse yet, because they are temporary, these visas encourage investment in the home country even during the workers stay here.
This doesn't fix the problem; it exacerbates it. Not only is work being given to non-citizens, but the companies supporting this are paying American wages to foreign nationals working here.
These leaders are not looking for long-term cures, they are settling for a variety of short-term treatments --- treatments that not only mask the symptoms but also worsen the ailment. Do not forget: The business decisions of today could be the potential privations of tomorrow.
As the outsourcing model continues to mature, American wealth will be exported to other nations in larger and larger quantities. But anyone studying globalism knows that a flattening is inevitable, and currency disparities tend to equalize with time. So outsourcing is already destined to swallow its own economic benefit. Thus, now --- not later --- is the time for this country to look for long-term solutions.
One might be for American industry leaders to devote more attention to our nation's educational system. Business must assume some responsibility to promote and support increased interest in the fields of science and engineering.
Studies have shown IQs decline in young people during the summer break. If American corporations offered more internships for students, the positive results would be multifold: affordable labor to rival our outsourced counterparts and keep jobs here; early experience to take real-world knowledge and map it to theory learned in the classroom, and thought leadership because these companies would be giving these applicants early access to the senior minds in industry. Since the students are now getting education all year round, we as a nation start to narrow the gap between education here and overseas.
If American companies want higher quality, more effective or better educated people in the United States, they should want to have a larger role in the incubation of this country's knowledge workers now. The worst possible thing they could do is run to the government and ask for relaxed restrictions --- the short-term H1-B visa solution --- so they can find a treatment elsewhere in the world.
However, no long-term solution to this problem will be easy. Reform, such as the one we've proposed, is difficult and requires effort, input, feedback and support from a variety of sources. But therein lies the key: It requires thinking on the community level, which brings us right back to what largely caused the problem in the first place --- too much individualistic thinking and not enough collectivist intentions.
The solution of the outsourcing trap needs to be found here, not offshore, and certainly not with the H1-B visas.