Monday, May 23, 2011

Should you OUTSOURCE to India?

India has a large number of highly educated and motivated workers.  Does it make sense to outsource your work there?

We live in an amazing time.  I can work from a computer on an island off the coast of Georgia, communicating with a client in Slovenia, who sends me documents electronically.  In turn, I can forward these to my Draftsman and Patent Searcher in India.  And once I obtain results from them, file a Patent for my Slovenian client electronically with the Patent Office online.

All I need to work, anywhere, is a computer, preferably one with dual screens (larger the better) and an Internet connection - even a satellite uplink will do.  And increasingly, my client base is worldwide, instead of local, and for the most part, many of these clients I never meet, except online.

It is a pretty amazing thing, when you think about it, and it collapses our world into the "Global Village" that Mashall McLuhan thought television would create.

And in this model, you can hire the person who works the most effectively, in terms of quality and price, without regard for national boundaries.

Ahhh, national boundaries.  Some people think these are physical things - as if they were etched into the face of the planet as they are onto a political globe.  But they are a creation of man, not God.

And some folks, even "Liberals" have odd ideas about national boundaries.  Right-wing conservatives suggest that we build a "fence" to keep out Mexicans.  But left-wing Liberals decry the "loss of jobs" due to outsourcing (while at the same time wanting amnesty for illegal immigrants, as if they were different things).

My take is this - let the jobs go where they are most cost-effective.  What will happen over time, and it will take time, is that people in such places will make more money, and as a result, raise their standard of living.  Eventually, the cost delta will evaporate and the need to "outsource" will evaporate as well.

On the other hand, if you try to fight this by insisting that US workers get all sorts of paid benefits and perks, all you are doing is accelerating the trend.  And if you try to tack on onerous import duties to "save jobs" all you will do is raise the cost of living for all of us, which in turn means we will all demand more in wages, prices will go up, inflation will skyrocket, and our exports will wither.

And I know this because it was tried in the past.  The stagflation of the 1970's and early 1980's was due to higher and higher wages which in turn raised costs significantly, which meant even the simplest consumer goods were unaffordable.  And it also meant that a few people worked at very high wages and the rest of us were unemployed or paid crap.

Let the market settle out, and eventually an equilibrium will be reached.  As the Chinese and the Indians demand higher standards of living, their wages will go up and up, and suddenly, "in sourcing" will become more popular.

And it is a trend that is starting, albeit slowly.  During the recent recession, people lost a lot of high-paying jobs - mostly because they were scandalously overpaid for what they did.  Making $100,000 a year as a school teacher or an HR manager is just silly.  And eventually, these folks will go back to work - for less money, of course, but a "living wage" nevertheless.  And at those wages, they will be more competitive with overseas workers.

I used to use U.S. Patent Searchers and Draftsmen.  Why did I stop?  Well, they would tell me it would  take 4-8 weeks to get the work done, and drawings would be $100 a sheet, and often poorly done.  Searchers wanted $1000 and up for searches, again with a 4-8 week delay.

The Indians do the work in a week or less, sometimes overnight, and for about 1/3 the cost.    Even at these rates, a U.S. worker could make a reasonable living.  But it would mean no Lexus, of course.  And we all have to have our Lexus, right?
And the quality of the Indian work is stellar.  When I complained about poor quality to my U.S. Contractors, it was "F*ck You!  I have more business than I can deal with as it is!"

Since the recession, some of these folks have called me up, trying to play nice now, and asking if I have any business for them.  But their prices remain the same, they just have less work to do, and want to make the same amount out of it.  We Attorneys, in contrast, have had to lower our prices to conform to our client's expectations.

So, I will continue to outsource for the foreseeable future.  I like Indians and I like the work they do.  And saying I should "hire American" to be patriotic is a stupid as saying I should buy a poorly-made GM car out of patriotism.

Both arguments are a classic example of weak thinking.  If you want crappy product and high prices, you can go that route.  But people won't get on the ball, unless there is competition.  And even then, there are those who would rather complain about the unfairness of it all, than actually sit down and think whether their own shoddy work and high prices are to blame.

Now, I already know what the scumbag commie hippie contingent will say in response to this, as I already heard it from my commie hippie brother.  "Well that's all very well and fine and all, but suppose it was your job being outsourced?"

Well, three things.  First, my answer would be the same.  If some guy in India can do what I do, for less, then more power to him.  Funny how hippies can be all touchy-feely but hate people from India for some reason.  I guess they want them to starve like hippies do.

Second, one reason I got an education and actually learned job skills was so that some unskilled laborer on the other side of the planet would not take my job.  If all you are going to do is sit at the back of the class and throw spitballs, sorry, I have no sympathy for you.  If all you are going to do is spend $50,000 of your parent's money studying "anthropology", I have no sympathy for you.  Get an education - a real one, not the easiest classes you could find to take.

Third, there are Indian Lawyers who are registered to practice before the USPTO who are after my job.  And I know this, because I trained one of them!  And I hope he does well, too.  May the best man win, and all.  I enjoy a good challenge.

And fourth, (although I said three), I did see all of this coming and took steps to cut my overhead, my personal overhead, and structure my business and my life to be competitive, so I don't have to worry about Sanjay from Bangalore undercutting my prices.

But that is being proactive, not passive.  Seeing how things are going to play out and taking action - rather than just whining about the "unfairness" of it all.

People with no talents and no skills, who are wildly overpaid and saved little and spent it all (and are heavily in debt) have a lot to fear from outsourcing.  But again, we should feel sorry for people who take the path of least resistance?

I think not.