How Outsourcing Creates American Jobs

This highly-Dugg article lists the top U.S. businesses that have moved facilities and jobs abroad. It's generating comments like this one:

you outsource your country and theres nothing LEFT for normal people to work at except malls and retail stores.

But just a few days earlier, Vivek Wadhwa wrote this interesting article in The American that explains why, outsourcing from the U.S. to other countries withstanding, the U.S. is also a beneficiary of outsourcing by foreign companies:

One would think that labor costs would dictate that most of the work would flow from the United States abroad to the developing world or lower-cost nations. In fact, that's not happening very much at all. Work actually is being outsourced to the United States from the United Kingdom, Canada, Australia, Spain—even Saudi Arabia and the United Arab Emirates. While the single largest percentage of oDesk work goes to contractors in India, the United States ranks No. 3. And the number of hours worked in the United States is growing at a pace of 267 percent, considerably faster than the 188 percent for India. The salary differentials between India and the United States are far smaller than one might have thought, according to oDesk billing data. Indian workers were paid roughly $11 an hour on average and U.S. workers were paid roughly $17.50 an hour. But Americans receive higher evaluations for their work—an average 4.48 out of 5, compared with 4.12 for India.

I glean four main reasons from the article about why this is happening:

1. If a company wants to cater to customers in the United States, it needs a sales division in the U.S. that can interact with U.S. consumers culturally, and overcome the language barrier.

2. Some complicated technical work requires more educated, highly productive American workers.

3. If a company has sales in the U.S., that provides an incentive to bring more parts of the company over. As Wadhwa argues, keeping sales and engineering on other sides of the globe can "undermine product development."

4. Time zones are important—many multinational companies trying to sell in the U.S. will want to improve efficiency by eliminating lack of overlap in working hours between American divisions and other divisions. That means sending more jobs to the U.S.

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