THINKING OUT LOUD / IMMIGRATION
Why So Many Jobs Have Wanderlust
By Kenneth Swift
Kenneth Swift is a director of finance at an Orange County-based
multinational technology company.
May 1, 2005
As I watched from his side, Praveen peered intently at his computer,
his face bathed in the bluish glow from the screen. He furrowed his
brow, seemingly perplexed by the information arrayed before him on the
display. Using his mouse, he clicked to a different view and ran a
finger along the screen, tracing a row of numbers. His eyebrows rose.
"Got it," he exclaimed.
A few more clicks and the screen informed him that the transaction was
complete and another invoice had been approved for payment on behalf
of his client. He returned to the queue and selected the next invoice
from the hundreds awaiting attention. And so it went for the rest of
The work itself is unremarkable, as is the young man performing it.
His is an office much like any in corporate America, a warren of
cubicles, neatly aligned, brightly lighted, staffed with other workers
just like him, staring at a computer screen just like his. It could be
anywhere in the United States, but it is far removed.
Praveen is a citizen of India, his employer an Indian corporation, his
office one of many in a bucolic, campus-like setting in the southern
Indian city of Bangalore. The invoices he processes are those of a
major multinational American corporation, one of many such clients
serviced by his company. The phenomenon is called "outsourcing" or, in
reference to the geographical distance between client and provider,
Soon, Praveen and his co-workers will be handling similar
responsibilities for my employer, and that was the reason for my visit
from half a world away. Though my own job is not affected
(thankfully), many of my less fortunate co-workers cannot say the
same. Over the next few months, hundreds of them will have packed
their family pictures and other desktop memorabilia and left the
company parking lot for the last time.
Why are American companies turning their own workers out into the street?
Answer: Because the Darwinian nature of capitalism demands it.
Companies that do not pursue competitive advantages will soon find
themselves competitively disadvantaged. And disadvantaged companies
eventually become failed companies.
Labor costs in India can be less than 10% of those in the U.S., and
there is a huge pool of young and eager English-speaking college
graduates looking to outsourcing as their ticket to the middle class.
Praveen, the accounts payable clerk, is a good example of this
so-called wage arbitrage. He will earn roughly $3,000 per year in
India, performing the same work for which my employer pays about
$35,000 in the U.S. Even after the company I work for pays benefits,
taxes and overhead in India, the expected savings are still more than
However, there is a second and perhaps much more significant benefit
beyond the simple "lift and shift" of jobs. The Indian outsourcing
companies use a business model that aims to professionalize jobs
considered simply clerical in the United States. Jobs for which
American companies would hire a high school graduate are performed by
a college graduate in India, often by one with an advanced degree
and/or post-graduate professional certification.
By professionalizing the work, the outsourcers can offer an additional
service to their clients: an extremely high degree of accuracy and
reliability coupled with a commitment, usually embodied in the service
contract, to continually improve the client's business processes. The
Indian employees are expected to not only perform the work at or above
the level of their American counterparts but also develop improvements
with which to constantly raise their levels of productivity and
Can a program that causes so much upheaval among American workers be
considered a good thing? That's a matter of perspective.
At the microeconomic level, for companies like mine, it is a
faster-better-cheaper way to get things done. Profits will increase,
providing more capital to reinvest in other projects and initiatives.
That is certainly a net positive and also leads to macroeconomic
benefits: healthier companies create economic growth, and growth is
the proverbial rising tide that lifts all boats.
For companies that provide outsourcing services in countries like
India, the benefits are many: jobs for people such as Praveen, profits
for their employers, economic growth and foreign exchange for the
country and a rising standard of living for its citizens, to name a
Yet from the perspective of American workers, including many of my
colleagues who are facing the loss of their jobs - some not for the
first time - outsourcing is just another corporate synonym for
Yet it is part of the natural gravitational pull that creates the
rising tide that will, in the long run, lift all boats. The
unfortunate downside is that it also causes the least seaworthy to
founder. Many will ultimately right themselves and sail on, but a few
will sink to the bottom.
It is progress for the many at the expense of the few, for the
currents of capitalism are merciless.