[saint.panda]

The race to the bottom argument in terms of moral, ethical, even environmental standards is simply not substantiated by economic data. Nobody forces people to work for foreign companies. In fact, it is usually foreign corporations in less developed countries that lead the way for other companies, exactly because they also face pressure from their home countries once pictures of children in sweatshops are shown. It's not like Nike invented hard labour in these countries. What corporations care about is not cheap labour but high productivity. Sure there are always bad apples, but when I look to China, there's a reason why people aspire to working for a foreign corporation.

But it's true that outsourcing isn't always great (what is). Managers all too often forget about the non-trade-ability of certain goods and more importantly, the high transaction costs involved, especially in the long run.

Very good story about why American Apparel's founder thinks it's better to keep production in the US instead of outsourcing it like GAP does:
Face value | The hustler | Economist.com
“American Apparel is not an altruistic company,” says Mr Charney. “I believe in capitalism and self-interest. Self-interest can involve being generous with others.” (...)
His motive [for being opposed to outsourcing], once again, is self-interest: it gives him control over every stage of production, and enables him to monitor the fickle fashion market and respond quickly to new trends.


That said, we just recently "outsourced" a little Facebook application to China and it couldn't have been a better decision. The price was 10 times lower than if we had done it in Switzerland and the result was very satisfactory.

 

[gloco]

Quote:

Originally Posted by evilking /img/forum/go_quote.gif Woah, way too much thought went into that post. In the 'Real World', the outsourcing process is much simpler: EK

hehe. Hey, I can't help it. Outsourcing is the devil, imho.

 

[10068]

Quote:

Originally Posted by ast /img/forum/go_quote.gif Look at the Chinese enconomy growth rate and Chinese consumer market and business opportunities[...]

Can you elaborate on this part, please?


Quote:

Originally Posted by synaesthetic /img/forum/go_quote.gif The answer to all stupid decisions by American business. If you want to be successful in the corporate world you have to think about long-term retention of customers, and market share. Thinking only of profits is self-defeating.

Exactly. Your last sentence pretty much summarizes the entire point of my OP

I would like to say that this is true: Profit is not a means to an end. Profit is a side-effect of quality engineering and quality product support.

However, if that is true, why does a company like Verizon or AT&T make so much money? I've worked for both, and their Quality Control, business practices, and Customer Support are equally crapty. Keep in mind I don't believe either of those companies outsource for Customer Support. Although I could be wrong.


Quote:

Originally Posted by ericj /img/forum/go_quote.gif Oh yeah, and then there was the time when i worked for an embedded linux vendor, and the people we'd outsourced to in india used GPL code that was written by a competitor, and took out the attribution and license tags. We told them that we recognized the code as belonging to a competitor, that we thought it was a good idea to use it, and perfectly legal since it was GPL code, but that they MUST put the attribution and license tags back. And they ignored us. So we told management that they'd done this, and that it was actionable if we released it without restoring the attibution. And they ignored us. And the competitor who had written the code sued us and won, and the judgement was far larger than the amount of money we'd saved by outsourcing.

Classic.

Suits wouldn't recognize logic and common sense if it sat on their faces. The idiocy of Corporate America really pisses me off. It's amazing what power and greed can do to your IQ and critical-thinking skills.


Quote:

Originally Posted by ericj /img/forum/go_quote.gif [...]I'm certain that there are mediocre, unprofessional engineers who speak better english who would take the job at the same rate.

I don't know about the same rate(s), however I agree about the quality or lack thereof of the work produced. Personally, I would rather have a lazy English-speaking employee take too long and fumble through a task, because at least you can communicate with them in regards to learning opportunities, areas for improvement, etc etc. Language barriers are a huge detriment to quality production and service delivery, although few will admit it in these "Be PC, don't offend anyone and CYA" times.

A great exmaple: I work with a girl from Indian who has a great work ethic, and she's smart. She's majoring in EE if I remember correctly. However, she takes longer than most other employees to complete her tasks because she has to continually repeat herself (sometimes 2-3 times, and on very basic words). Her intelligence and technical knowledge holds much less weight than it could if she didn't have a thick accent and/or was a native-English-speaker -- imagine how much faster and productive she would be if everyone understood her clearly. Lastly, again using the individual above, it severely reduces perception of aptitude and intelligence when there is a language barrier. I never would have guessed she is majoring in EE, because the language issues easily translate (incorrectly, mind you) into a lack of skill and/or mental capacity.

Also, i'd like to mention that I've dealt personally with workers who are providing an outsourced service, and the quality of service is predictably and consistently lower then an equivalent locally-provided service. What's the point of outsourcing if your end product is crap?


Quote:

Originally Posted by gloco /img/forum/go_quote.gif Outsourcing is the 21st century plague on not just American workers, but all workers on a global level. It undermines labor laws and moral and ethical treatment of humans.

Your mention of moral and ethical concerns made me think of Wal-Mart. Above I mentioned Verizon and AT&T, although to be honest they aren't glaring offenders in any particular way. Wal-Mart is a great example of something that perplexes me -- I think Wal-Mart's practices and treatment of their workers is almost universally hated, however they continue to make huge profits. Perhaps those of us who state that profits are not a means to an end are simply thinking too idealistically.

 

[10068]

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[10068]

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[F107plus5]

We're so busy doing each others' laundry that we forget the fact that sooner or later our washing machines are gonna need replacing.

 

[saint.panda]

Thinking only of profit is not self-defeating. It is the raison d'etre of a corporation. Quality of products is a means for achieving profit, not the other way around. Of course, that doesn't mean companies should ignore issues like corporate social responsibility although even that is debatable according to some. But yes, thinking only of short-term profit is self-defeating. Then again, that's a trade-off for going public and having to deal with impatient shareholders.

 

[synaesthetic]

Quote:

Originally Posted by saint.panda /img/forum/go_quote.gif Thinking only of profit is not self-defeating. It is the raison d'etre of a corporation. Any company claiming otherwise is lying or doing a bad job. Quality of products is a means for achieving profit, not the other way around. But yes, thinking only of short-term profit is self-defeating.

Market share is vastly more important than mere short-term profit. If you own the market, you own the profits and everything else that goes along with it. Profit is a side-effect of market share. =P

Quote:

Originally Posted by gloco /img/forum/go_quote.gif The idea on paper looks great, much like the atom bomb did. Where did that get us? Outsourcing is the 21st century plague on not just American workers, but all workers on a global level. It undermines labor laws and moral and ethical treatment of humans. Think I'm nuts? Look at how Chinese, Indian, southeast Asian peoples are being treated in the grand scheme to wear your $150 ghetto-flavored Nike's. Some of the comments ericj has made are comical, why? Because they remind me of all my dealings with my Indian counterparts and their flat out lack of ability to think on their own (let alone the rampant lying and sheer laziness is following procedure and what's good for the company and the trickle down effect of failing to following company policies and guidelines). When corporations outsource, they are effectively stating: "the hell with our responsibilities to our fellow man, we wanna make a buck." I'm sure there's some of you that will laugh at that simple logic, but tell me differently when I'm the one sitting in my year-end town hall listening to some guy babble on about profits and margins and how good its for HIS wallet (but not ours...who gives a damn if the employees who break their backs get a cut of the money pie). Not to sound like Mr. Doom & Gloom, but this ain't gonna last much longer (make of that last line what you will).

Business is war. And that's how it should be. Fierce competition is always good news for the consumer.

Oh, and the research into the development of the fast-fission device birthed a whole host of technologies we take for granted today, including the very computer you typed this on. The modern computer is a descendant of the devices created to work out the complex hydrocodes needed to create a functional nuclear bomb.

History has proven time and time again that humans are most creative and most innovative when the doodoo hits the fan. We don't work very well when everything is all rosy and relaxing. War research has given us a great many technologies that we use throughout our day-to-day life.

 

[saint.panda]

Quote:

Originally Posted by synaesthetic /img/forum/go_quote.gif Market share is vastly more important than mere short-term profit. If you own the market, you own the profits and everything else that goes along with it. Profit is a side-effect of market share. =P

Was I claiming otherwise? As for focusing too much on market share, just look at AOL in its heyday.

 

[synaesthetic]

Quote:

Originally Posted by saint.panda /img/forum/go_quote.gif Was I claiming otherwise? As for focusing too much on market share, just look at AOL in its heyday.

I wasn't disagreeing with you.

 

[wavoman]

A few things to point out:

1.The goal of the corporation is, strictly speaking, not profit, but increasing shareholder wealth. Side note: it is a plague that many corporate top excutives try to feather their own nests instead, but that is changing (slowly) here in the U.S.

2. The most common way to increase shareholder weath is indeed to earn handsome profits. But only if these can be sustained over the long term.

3. There are other ways, as other posters correctly pointed out: if you are smaller than your competitors but build crushing market share even without profit (like AOL in the early days), you can get acquired by a larger company that has lost share to you, and they will create profits by cutting costs (outsourcing, for instance!), leveraging their larger infrastucture, and your shareholders profit (big time) from the acquisition. This is the typical goal of start-ups -- market share, not profit -- although it got a bad rep in the dot com bust (nonetheless it still works if there is ultimate profit after the roll-up, which was not a case with dot coms).

4. The fast track to market share is to "define and own the platform" -- in other words, alter the field, do something new, change the game, become the standard. Think Cisco, or Google. You can do that through superior technology, or with merely average technology but rock-solid understanding of your customers, their use cases and patterns of consumption -- this is Bose, to bring it back to our field.

5. That's why you never outsource (if you are smart) key engineering, market research, or product development -- you give up all chance of hitting the platform home run.

6. But you do outsource anything that will cut manufacturing, production, or support costs and not lower quality. This is mandatory, and helps the workers in the countries outsourced to, not hurts them (despite claims in this forum to the contrary). Of course many companies do this badly and hurt their products, as the examples posted here show.

7. And the reason for that (trying now to tie this all together) is: cost cutting increases SHORT TERM profits immediately, and the product quality disaster takes longer to surface, so managers "get away" with it.

8. That was the wind-up, here's the pitch: investors confuse short term quarter-over-quarter profit with long term profit, and they choose it over real wealth building. Corporations know this, and therefore reward short term cost cutting and short term profits. [Posters synaesthetic and Kees have made this point precisely].

So it all goes to hell in a handbasket over the long term. The U.S. will not lead the world economy much longer unless we break this cycle.

9. And we focus on short term profits because we focus on short term returns in our mutual funds and 401k's (I like to call them 200.5 plans, since they have half the value of your former 401). Why? Because we didn't save enough early on, and we are now in a panic to build our retirement nest egg.

10. We over-consume and under-save. If you want to stop outsourcing, if you decry the gutting of the I.T. industry in the U.S., then save more each month. Put more away every payday. Get your friends and family to do likewise. We spend a lot of money here on headphones, but at least they are durable goods, and we buy/sell/trade used gear all the time. This does not happen in fashion or entertainment.

11. With increased long-term investments that flow from a solid base of capital formation, corporations will turn their focus to building lasting market share and the continual flow of profits that translates into real shareholder enrichment in the long term. And outsourcing will seek and find its correct level.

 

[Kilane]

Quote:

Originally Posted by wavoman /img/forum/go_quote.gif The goal of the corporation is, strictly speaking, not profit, but increasing shareholder wealth.

At risk of tar and feathering, and violating the scope of the discussion... SHOULD it be that.

IMHO, we've lost sight of the idea of why corporations exist as soon as you cut out what on earth you're doing. If you're trying to appease shareholders instead of customers you've got it backward. Customers should be your primary target, more money invested in your company should be the side effect.

You're absolutely right in your quote, I just always thought it was bass ackwards.

 

[10068]

Quote:

Originally Posted by synaesthetic View Post The answer to all stupid decisions by American business. If you want to be successful in the corporate world you have to think about long-term retention of customers, and market share. Thinking only of profits is self-defeating. Response from Sduibek: Exactly. Your last sentence pretty much summarizes the entire point of my OP I would like to say that this is true: "Profit is not a means to an end. Profit is a side-effect of quality engineering and quality product support." However, if that is true, why does a company like Verizon or AT&T make so much money? I've worked for both, and their Quality Control, business practices, and Customer Support are equally crapty. Keep in mind I don't believe either of those companies outsource for Customer Support. Although I could be wrong.

Any ideas on this?

A better example is WalMart. I'd like to know why WalMart continues to do very well financially, considering they:

1) Disregard basic business ethics
2) Do not value humanistic morals
3) Treat their workers horribly (worst against women and foreigners from what i've heard) [[Side note: hasn't WalMart been the recipient of class-action lawsuits regarding the mistreating of workers, sexual harassment, discrimination, etc?]]
4) Continually disregard and have illegally violated EPA environmental regulations
5) Sell products of consistently low quality.

re: #5 above-- I wouldn't be surprised if most of what they sell comes from sweatshops. The quality of the products, furthermore, is about the lowest you can get from the products in question. It DOES NOT save the consumer money if they buy something that's a piece of crap and needs to be replaced in a very short span of time. I would like to know why a company like this is so excessively profitable.

Are we really so deluded and narcissistic as a society that we value low prices over ALL else, including quality, ethics, morals, and tolerance?

 

[wavoman]

Quote:

Originally Posted by Sduibek /img/forum/go_quote.gif Are we really so deluded and narcissistic as a society that we value low prices over ALL else, including quality, ethics, morals, and tolerance?

and consumption over savings.

I'm afraid the answer is yes.