Outsourcing, and the scary backswing of macroeconomics

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I was just reading this story in Wired.

The gist of it is that outsourcing is going to move 200,000 jobs overseas (from the US) every year. This trend is throwing large numbers of US based programmers out of work. While there are advantages in the form of efficiency for US companies, as well as problems due to unforseen complications, the balance seems to be tilting in outsourcing's favor.

The unfortunate truth of the matter is that India (and other third world countries) provide cheap, intelligent, and dedicated workers. They have to be. There is a lot of competition for the jobs, and many other Indian coders ready to take their places if they should fail.

I have gone to school with some very driven, and extremely intelligent Indian kids. If it didn't smack of 19^th century pseudoscience, I would swear that Indian's have a natural talent at mathematics that the average Caucasian kid lacks (or maybe they pay more attention in school, and play less Nintendo). Basically, don't bet on North American workers being any smarter, because they aren't. Usually we have a highly developped sense of entitlement to boot.

So what do we do now? What jobs are left once the designing and engineering move to equally qualified but much cheaper geeks overseas? I bet on banking. We still have a stranglehold on the international economy, and if we are smart we won't let go. It means of course that the divide between upper and lower class will continue to grow, since those with the dollars will be the ones with the potential to earn. More jobs will focus on servicing the needs of the rich rather than designing their products.

IT isn't the only prospect for outsourcing. Take the film industry for example; Bollywood is already carving a chunk out of hollywood. Low budget Indian films are getting good reviews for a fraction of the cost of their US counterparts. With digital effects replacing expensive pyrotechnics, expect the downward pressure on movie budgets to start up soon now.

Eventually, free trade advocates argue, wages will equalize, and jobs will no longer be worth outsourcing. In the meantime, outsourcing will help equalize the global financial disparity between North America and much of Asia. While I want the best for our neighbors overseas, I don't want to give it away at our expense.

I guess I am kind of rambling here. Outsourcing is out of the bottle now, and we can't jam it back in. Comanies that fail to take advantage of it now, will be out-competed by those that already have. Lower costs of living (at least 10x lower) in India leave it nearly impossible for local companies to compete in the IT sector, once their customers give it a try.