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U.S. Outsourcing and Multinational Corporations

March 18, 2008

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multinationalnafta4.jpgMany millions of jobs that have been harbored safely within the borders of the U.S. as an active part of the U.S. economy have been moved to distant locations outside the U.S. where labor costs are significantly reduced. The outsourcing of U.S. jobs, often referred to as “offshoring”, while not new, has become quite prolific since the advent of NAFTA by the Clinton Admini- stration. The immediate reaction was that hundreds of manufacturing plants were closed and relocated outside the States. Champions of NAFTA and the World Trade Organization rationalized that low-skilled and low-paying manufacturing jobs would be replaced with higher paying jobs in high-tech and service sectors. Corporate momentum is such that outsourcing has gained wholesale acceptance by companies across-the-board seeking lower costs and higher profits. Job outsourcing has moved up the corporate ladder of hierarchy from telemarketing jobs to highly-skilled and managerial positions. Multinational Corporate America has been relocating the very jobs that NAFTA and the WTO announced would replace low-paying manufacturing jobs. The newest wave of job outsourcing is being exercised in accounting and financial services, computer and IT services along with telecommunications.

Mexico was a huge testing field for NAFTA and corporate internal structuring. For a time, Multinational Corporate America sustained many manufacturing plants in Mexico within reach of the U.S. border. When the labor costs and the professional level of the Mexican worker began to increase, most of the plants were quickly abandoned for other less expensive provisions overseas. The corporate taste for labor manipulation was fully birthed.

multinationalinet.jpgMultiple times, Congressional measures have been considered to restrain the federal government from granting contracts to companies to send work overseas. The Bush Administration has consistently opposed the legislation. The administration has continually supported tax incentives to outsource jobs overseas. Unprecedented levels of sensitive personal information are being shipped overseas where privacy protections are not in place. The federal government has made efforts to undermine state laws by convincing state governors to accept new rules for trade agreements, working to promote the use of funding that employs outsourced workers overseas.

multinational2.jpgWhile it is safe to say that these multinationals have heavily funded the Bush campaigns, the same support was obviously in place when the trade agreements were pressed into service by the Clinton Administration. The role of money in politics often appears to be very subtle. General Electric, Deloitte Touche, IBM, Morgan Stanley, Goldman Sachs, Microsoft, Texas Instruments, SBC and Verizon are among the top exporters of U.S. jobs since 2000. There is speculation and analysis, but almost no solid information of the number of U.S. jobs that have been outsourced. Ernst & Young sends tax preparation work to India. Aetna has medical records reviewed in India. Deloitte sends government work to India and commonly brings Indian workers from overseas to perform government work. The large organizations that support a multinational workforce have resisted disclosure of any information that might work against their corporate benefit. The government has worked as a partner to stem public scrutiny of job outsourcing with no federal reporting requirements for outsourced jobs. Multinational corporate America is fearful over a public backlash of opinion that would prevent them from exercising complete autonomy over their corporate workforces.

multinational3deloitteinet.jpgIncreasing numbers in the United States labor force compete with developing third-world countries. The U.S. government continues to subcontract work to private contractors that often outsource with an overseas affiliate or subcontractor. Corporations like Deloitte Touche, have increasingly been sending IT and managerial jobs overseas. It is not uncommon for Deloitte, a major governmental finance and accounting firm, to bring foreign workers into the country to educate them while maintaining control of all aspects of worker’s lives, a form of indentured servitude. Work visas are commonly employed to bring foreign workers to work in the States for reduced wages. The action is considered as harmless and justifiable because of the number of multinational offices held by many players of Corporate America.

The effect of job globalization is the suppression of wages in the United States. 57% of reemployed displaced workers earned less in new jobs than in the jobs that were lost from outsourcing. 34% of those displaced workers saw earnings reductions of more than 20%. Brookings Institute recommends that outsourced reemployed workers recover 47 cents of every dollar that they used to earn.

multinationalefficiency.jpgPerhaps the ultimate expression of capitalism results in the export of jobs to lowest-cost countries to enable what used to be “American companies”, now multinational corporations that have the sole goal of maximizing their corporate profits. The ultimate political expression has evolved to a sector of the world that is, in effect, ruled by multinational corporations.

~ E. Manning

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12 Comments
  1. Lost_in_America permalink
    January 15, 2009 3:18 pm

    Well the word came down two weeks before Christmas that my and 250 of my friends jobs have been outsourced to a major provider of computer services. If I told you the name you would know it, and upon hearing it you would assume it was an American company.

    Also upon hearing it you would not realize that the jobs are actually going to India.

    My company is offering a job fare so that those of us displaced can all see at one time that comparable jobs to what we had no longer exist. At 50 years of age we find ourselves competing with those half our age with twice our education for jobs that won’t pay our bills.

    The starkest reality is no one cares.

    Perhaps if I rented a plane, bailed out of it, and faked my own death my story (and the thousands like me) would be news worthy. Perhaps if I was a Wall Street wizard caught up in a ponzi scheme my face and my plight would splash across the various news shows.

    Then maybe someone would care.

    As it is, I am not newsworthy. My personal tragedy is not titillating enough to cause a second glance from anyone.

    You should however know this:

    I am one of many. GM, Ford, Chrysler, Wall street, The Democrats, The Republicans, The Banks, and the Mortgage Companies will not be getting my business this year. Not because I would not like to invest in them, I just can’t. My job is gone.

    To my own company, I and those like me will not be able to have our bugs killed, our lawns maintained, or our homes warranteed. We can’t, we can’t afford it, or cable, or eating out. We can’t afford the thousand dollars a month cost of the cobra insurance option you offered us either, so, we can’t afford to be sick.

    So, when we get our little check or tax rebate from the new administration, we are not going to spend the nation back into recovery. We are going to try and keep the house and buy food one more month.

    For those who have sat on each others boards, passing out golden parachutes and voting each other raises (financed by outsourcing our jobs) has it ever occurred to you that at some point we can’t afford your products anymore? (No matter how cheap they are)

    But, then you know that no one really cares and be sure to tune in tonight we can all find out what the stars will be wearing at the inauguration.

  2. Other permalink
    September 28, 2008 12:56 am

    “Those who believe that outsourcing is a disease do not understand economics, or worse, are xenophobic or flat out racist.”

    Just stumbled on this post. I’m forced to wonder why certain people resort to such name calling when a simple opinion is expressed.

    Yours Truly,
    Other

  3. Katerina permalink
    August 8, 2008 4:37 pm

    Corey Chambers, Do you really think you understand economy? I am not xenofobic. Moreover I came to US as a foriegn worker and was granted a residence here. Yes that was a great opportunity for me. And I probably took a job from somebody else here. I also know that outsorcing helped to many of my friends in Russia to survive. Thanks to American people for that.

    But how long American people will develope other countries at thier own expence? My husband is American. He was working in a Machining industry. He can’t find job now. Good I still have a good income. In the shop at his last work workers had to work 15 hour day to compete with low quality offshore manufacturing. Nobody really care about quality any more. Americans loosing jobs, they can’t afford quality product. So they buy cheap low quality product. Corporations outsource more to get product even cheaper. Less jobs. Soon American wouldn’t able to afford even cheap Chinese dog’s food to feed their families.

    Where are we going?

    There is no such a thing like “free trade”. There is always regulations. Without regulations free market leads to a monopoly. It is a basis of economy BTW. That’s why America has antitrust law for example. That’s why there is regulations about safety of the products of enviroment of a work place. Corporations going offshore can get better profits because they can avoid some regulations. And it hurt American economy, first of all American hard working people. It corporations obvious now that they dump any competitions inside US with low price. And that is a thing that need to be stopped. Obviously, Corey, you knowledge of economy is pretty much limited.

  4. mahalkiel permalink
    June 24, 2008 9:06 am

    Astroturf warning!
    “The Observer” and “Cory Chambers” are very likely paid agents working from desks in Nepal or the Sudan.
    They know very well why there aren’t statistics to discuss. Those figures are deliberately kept hidden. We have to rely on the chicken hawks to tell us how many of our chickens they have killed!
    IN A FREE MARKET, LABOR, CAPITAL AND INFORMATION MUST ALSO BE FREE. National borders must be completely open – labor must be free to make choices, too. That is a mantra that you will never hear from these phony ops. Their interest is not in a free market, but in a market controlled by multinational corporations in their own interests.
    The owners of these corporations have interests that in no way coincide with the interests of ordinary Americans, and are often directly in opposition to them. Yet they control our political machinery with vast infusions of cash.
    They will happily export jobs to nations where machine guns and barbed wire regulate wages, and would love to put American workers in direct competition with slaves.

  5. April 8, 2008 2:37 pm

    Those who believe that outsourcing is a disease do not understand economics, or worse, are xenophobic or flat out racist. The premise that outsourcing “steals” jobs is false.

    Outsourcing is done to increase efficiency and profitability for a business, allow expansion of the business, and offer lower prices for the customers of that business. Outsourcing simply takes advantage of new technologies and lower priced communications to employ talented, educated humans across the globe who have worked hard to earn a chance for slightly better wages than they can make in thier local market. Outsourcing improves efficiency. Competition, efficiency and free enterprise create wealth for the U.S. and the entire world. Protectionism & socialism bring down economies and their people.

    If you remove the racist or xenophobic filters from your eyes, you would see that outsourcing is not too different from hiring someone from the next town instead of hiring someone in your family. There is nothing wrong with hiring someone qualified in your own family, and there is nothing wrong with hiring someone qualified for less money who is from out of town. The world is shrinking, so now China, India, Philippines and other developing countries are your new neighbors.

    That is why outsourcing is right, just, good for the economy, and here to stay. Take advantage of this change. There are many more changes to come.

    Corey Chambers
    coreychambers.com

    Xenophobia and racism have nothing whatever to do with offshoring. There is no hatred for other nations in taking care of personal interests and the need to provide a living. Other countries need to take care of themselves like we are expected to. Further, the U.S. needs to move honestly to protect its citizens instead of exploiting them. There is nothing wrong or immoral about taking care of yourself or your country. On the other hand, I suppose that American citizens could move to India to get gainful employment for pennies on the dollar if they made enough money to do so. Then America wouldn’t have a tax base. Yes, changes are coming. In the meantime, the reader knows what is really going on and who is accountable. ~ E.M.

  6. April 7, 2008 11:06 am

    Hillary and McCain will fight to deal with the outsourcing issues.

    http://www.h1bvisasucks.com/H1BDiscussions_issue_clinton.htm

    http://www.h1bvisasucks.com/H1BDiscussions_issue_mcain.htm

  7. April 1, 2008 12:10 am

    The American middle class-working class is rapidly losing ground thanks to 27 years of trickle down economics, “free trade”, outsourcing, illegal immigration and union busting. It’s time that we demand that our leaders look out for Main Street rather than just Wall Street.

    http://www.populistdemocrats.blogspot.com

  8. March 23, 2008 5:57 pm

    Well I have to admit that I was speaking from my personal experience in high tech. My organization of about 100 people just sent 21 jobs to Malaysia and Costa Rica. I’m also guilty of lumping illegal immigration with off shoring. Both have the same impact on the jobs market in my opinion. My first few Google searches didn’t come up with any good information. Most of the publicly available data appears to be old. I apologize and will try to remember that I ought to do my research before posting inflammatory remarks.

  9. March 23, 2008 5:56 pm

    Got stats? If your statement is true: There isn’t anything close to offsetting job loss in the US–then stats should be easy to find.

    No article should present just one side of the story.

  10. March 23, 2008 5:55 pm

    Are you serious? There isn’t anything close to offsetting job loss in the US. There are whole industries that are dying because of offshored labor. Look at call centers. Nobody opens them in the US now. Technical jobs are leaving in droves.

  11. March 23, 2008 5:53 pm

    Are you going to offset your jobs loss to outsourcing with jobs gained by foreign outsourcing to America–such as Toyota plants in the United States? Or is this just going to be a one sided diatribe?

    To be fair, this is a commentary designed to make a point in a short and readable format. It is not designed to be an all-inclusive thesis or white paper. ~E.M.

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