Commentary

American Workers: Offshore Yourselves!

William J. Rothwell
Professor of workforce education and development
Penn State's College of Education

Offshoring has become all the rage in the U.S. Global corporations are expanding their operations rapidly in such low-cost locales as China, India, Malaysia, Thailand, the Philippines, and other Asian nations. In the meantime, employers have been downsizing like crazy in the U.S. and in such other industrialized countries as Canada, France, Germany, Italy, Japan, the Russian Federation, the United Kingdom, and the European Union.

The scope of offshoring is huge. One source estimates that as many as 760,000 U.S. jobs have been lost to China alone. China has become the most attractive global spot for manufacturing and has supplanted the U.S. as the country of choice for foreign investment. India has emerged in the meantime as a location of choice for software and other high-tech development. Rediff.com, a business website, estimates that 1 in 10 U.S. high tech jobs will move to India, an English-speaking country already well-known for being a popular site for call center relocation.

What's the appeal of offshoring? The best-known reason for employers to move offshore is, of course, the huge differential in pay. Chinese workers earn about one-eighth their U.S. counterparts. Workers in India earn about one-tenth of their U.S. counterparts. It just makes good business sense to build products, or offer services, in low-wage locations and then ship them back where they can be sold at higher prices in the U.S. and in other high-wage nations.

But the huge pay differential is not the only appeal to employers. Benefits costs, and particularly health insurance increases, have been out of control in the U.S. for years and have been rising in double digits for more than a decade. Employers offshore do not need to supply the benefits expected in the U.S. and in the even more socialized nations of the European Union. China, India and other Asian nations look even more attractive when health insurance costs, bound to increase with aging workforces in the West, are factored in.

Similarly, employers in the U.S. and in other Western nations are saddled with many laws, rules and regulations with which to comply. Often they must have government approval to do just about anything. But that is not true in the developing economies of Asia.

Even more difficult to quantify are differences in work ethic. While Americans were once known for their willingness to work hard in hopes of future advancement and rewards, they may have been supplanted by the greater willingness of impoverished workers in Asian nations to do that. The individualistic work ethic of America may have already been supplanted by the group, collectivistic ethic of Asian nations where family success over generations, more than individual success now, is particularly prized.

So what should American workers do in the future? Here's a thought: they should outsource and offshore themselves!

American expertise is still widely prized around the world. Many Asian nations are willing to host American experts and consultants. China employs some 30,000 foreign experts each year to assist with the explosive growth that the country is experiencing. Similar needs exist in other parts of the developing world. As just one example, foreign workers in the United Arab Emirates are granted immediate work visas and face the lowest tax burden in the world at 1.5 percent. There is more work than local people can provide, and only 5 percent of the population of the UAE are natives of the country. The UAE is building about 300 skyscrapers simultaneously to keep up with demand for office space. The UAE and Bahrain are ranked as among the top most competitive nations in the world, while developed nations like Australia, the United Kingdom and the United States are ranked in 13th, 17th and 20th position respectively, with regard to organized efforts to improve competitiveness.

While not all workers may qualify to jump on the offshoring gravy train, many who could take advantage of it have not yet discovered its appeal. Tax burdens are lower. The quality of life is often the same-or higher.

The morale to the story is that American workers should not sit idly by while jobs leave. As the old saying goes, "if you can't beat them, join them." American workers should join employers by going offshore!

William J. Rothwell, Ph. D., is professor of workforce education and development in Penn State's College of Education and author of over 50 books on employee training and Human Resource-related topics.