Trump's policies on Outsourcing: What happens to America if they come true.
Updated: Jun 1, 2019
One of Trump's campaign pronouncement was that he would be "bringing jobs back to America" and would be imposing taxes on US companies that outsourced jobs to BPO firms abroad. While this may sound great to hear and many Americans may think that they wouldn't mind paying "a few more bucks" for services and products, if the jobs came back to US, the actual economic loss that may render from barring outsourcing, by the Trump administration, will be far greater than what most Americans can anticipate.
According to the most recent data, 14 million jobs were outsourced from US in 2013. Industries that mostly outsourced were, technology, call centers, human resource and manufacturing. The amount of jobs outsourced is almost double of the amount of current number of unemployed people in United States, if all of these jobs were to be returned, it would not only provide jobs for all these unemployed, but would also provide full-time work to the 5.6 million workers currently working part-time. Great for America and all the unemployed people, right? Wrong! The whole notion incorrectly assumes that the unemployed in US have the skills needed for these positions. For example, some of the most outsourced jobs in silicon valley alone, are related to IT and software developing. Google has handed out much of its IT and development work to Cognizant, a US based company that has most of its employees in India. While Microsoft has outsourced to Infosys, another Indian BPO firm. Ask yourself, if all these jobs were to be brought back to US, will the 7.4 million currently unemployed have the skill set needed to tackle high skilled work needed in the IT sector? (Alternatively, we could also ask if they did have the skills for such jobs why are they unemployed in the first place, when there is a high demand of such skills.)
Another example would be, the Apple manufacturing factory in China. Almost 300,000 workers currently work there. If you ever wonder why these jobs can never be brought back to US, ask Sri. There are only 83 cities in US which has the total population, not workforce, mind you, which exceeds this number. Even if the work was brought back to New York, the biggest city in US, 3 out of 100 New Yorkers would be on assembly line, working on making iPhones every day. Can you even imagine that?
The US clothing industry is another big market for outsourcing. In 2013, $80 billion worth of apparels were imported from foreign countries. A significant portion of which, were from China and Bangladesh. To bring apparel manufacturing back to US would have a ripple effect, that is beyond just, having to pay "a few extra bucks" for clothes. Finding skilled labor and talent is one of the biggest hindrance as to why manufacturing clothes in US is so hard. And this is something that simply cannot be fixed by training new labor as supply of such labor would always exceed demand. A much bigger problem is finding the right machinery. Factories in the Garment District in New York is very myopic- they do what they do and don't look to the coming weeks, months or years. Double-folded machines used for making polo shirts , for example, are near impossible to find in the Garment
district and the quality of polo shirts that China produces is extremely hard to replicate back in the US, if not impossible. Thus barring outsourcing of jobs in the clothing industry wouldn't just mean that you would be paying more for the clothes you buy, it would also make their quality much poor and would also mean that US export of apparel to other countries would fall as well (due to poor quality of clothes). Is that a picture you would really want to see?
The words Globalisation and specialisation are there for a reason, in the era of global villages, each of us specialise in certain aspects and hire and trade each others' skills to maximise profit and efficiency. At the end of the day, outsourcing doesn't take away jobs, it only off-shores those that are non-core and wouldn't be of any benefit if were done by in-house, all the while saving businesses money which they can then use to invest to not only grow their business but to provide better welfare to their employees as well.
Zayed Uddin Ahmed is the Founder and CEO of ASL Preservation Solutions, a startup BPO firm that provides Outsourcing Solutions to small and medium sized companies. To know more about him and his firm go to http://www.aslpreservationsolutions.com/