Politics Aside, Offshore Outsourcing Hurts Businesses Long Term

Don Manzullo, Chairman of the U.S. House of Representatives Small Business Committee, has criticized CEOs of large public companies in the United States for offshore outsourcing.

Manzullo said that CEOs who measure success by the closing price of their company's stock are putting at risk the long-range viability of small businesses. He singled out CEOs who are sending work offshore in droves, "exploiting cheap labor for short term stock gains." He noted that these companies are pulling work from smaller subcontractors and seeking cheaper offshore providers.

Manzullo urged those same CEOs to look long-term. In a Committee hearing earlier this week, experts testified that "the long-range value of a company improves the more the company invests in its workers instead of relying on cheap labor."

Offshore outsourcing is a political hot potato in the United States right now. In the current environment, no politician planning to run for re-election in the U.S. would dare do anything except speak out against offshore outsourcing. So in that sense Representative Manzullo's comments are not surprising.

But the expert testimony taken at the Committee hearing makes an excellent point, independent of politics. U.S. companies will be in precarious shape five years from now if key technology, expertise and know-how is outsourced. Internal competencies will gradually disappear, and if they are not renewed and replaced, companies will lose their competitive edge. In this highly competitive age, it doesn't take much for a competitor to come in and eat your lunch.

Then where will all those quarterly earnings come from?

See also the earlier post by Mark here at Blogcritics which made a similar point.

(Adapted from a post that first appeared on Small Business Trends, the author's weblog.)

Article Author: Anita Campbell

Anita Campbell is the Editor of the award-winning Small Business Trends (www.smallbiztrends.com) website and host of her own talk radio program, Small Business Trends Radio, on the WSRadio.com Internet network.

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