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 Daily
Independent Online.
* Wednesday, June 30, 2004.
Who gains from outsourcing?
Lekan Sote
Lekansote @yahoo.com
In The Acts of The Apostles,
the 12 disciples of Jesus Christ thought the job of allocation of
foodstuff and other suppliers between the grumbling Greek and Jewish
widows was beneath their station, so they picked Stephen, Philips and a
few others to administer this mundane chore. In their words, “We apostles should spend our time
preaching and teaching the word of God, not administering the food
program.” The disciples knew
that they would be wasting their precious time on less celestial, and
less edifying, chores, so they outsourced these to Stephen & Co. Today, the West concentrates its
energy on the new frontiers of hydrogen and solar energy, biotech,
nanotechnology, commercialisation of space technology, and broadband and
wireless telecommunications, and farms out low-end jobs to the rest of
the world.
A motivational author avers that wearisome
labour is found at the bottom.
Those at the bottom of the work ladder are called labourers, and
live from the sweat that drops from their brows. The Bible refers to them as
hewers of wood and drawers of water. The author adds that labourers will continue to slave
for those at the top echelon of society, unnoticed, underpaid and
unappreciated. Reports
indicate that the American economy is losing jobs to the emerging
markets, especially in the areas of information and communication
technology. As a matter of
fact, it is becoming very fashionable for jobs to be outsourced to East
Europe, Asia and - to a lesser extent- Africa. And citizens of the West are - oh! -- hopping mad that
their economy will soon thin out—the short term gains to the companies
notwithstanding.
They are alarmed that the outsourcing
cankerworm is gradually creeping away from call centres, and is now
striding confidently into other areas including “software programming,
auditing, accounting, engineering design, telemarketing, animation,
editing, transcription, legal assistance, and finally core research.” But
experts insist that the new products, processes, and markets, spurned by
the new technologies of the New Economy should help create new jobs for
the West in the no distant future.
But the fact remains that Americans, who constitute less than one
sixth of the population of the world, control more than one quarter of
the economic resources of the world. And of the 260 million Americans, more than 50 per
cent own one asset or the other:
Their holdings range from real estate, to stocks and bonds.
Many American and European companies
operate throughout the world in far flung places as the oilfields of the
Persian Gulf and the Niger Delta, the plantations of Southern America,
and the goldmines of South Africa.
Those who own shares in these mega corporations practically own
the world. You can literally
say that the West holds the chips.
Classical economists identify three basic factors of production as
land, labour and capital.
But capital, which is the premium of this trio, is largely in the
hands of the West. As you
know, rent accrues to land, wages accrue to labour, and dividends accrue
to capital. With lower tax
tariffs, more American companies are paying higher dividends: 3M, with a cache of $3.8 billion
accumulated from cost cutting, paid out more than $1.1 billion in
dividend to their investors in the first quarter of 2004.
The man who owns capital will employ both
the labour and the land to his advantage. The resources of the land must perforce yield to the
promptings of the capitalist, otherwise the potential wealth would remain
locked up permanently. And
while personnel from the West provide the top echelon of most of the
corporations that work the oil fields, only the factory floor jobs go to
the natives. In the field of
Software development, for instance, the job of Software Architect, which
is the top of the shelf job in the software industry, commands between
$150, 000 and $250, 000 salaries, and is never outsourced outside
America. But the basic
programmer’s job, which commands between $52,000 and $81,000 in America,
is outsourced to the grateful Indian at a measly $10,600. You can see the gain that accrues
to the shareholder.
Like bellhops, the rest of the world does
the rough job at the behest of the awesome capital of the West. These poor folks truly work for
their money, whereas the people of the West have perfected the art of
making their money work for them.
Warren Buffet is the icon and high priest, and his company,
Hathaway Berkshire, is the archetypal altar, of the Holy Grail that
teaches the art of making your money work for you. There is a revivalism of sorts
going on these days: At the
1884 Berlin Conference, the countries of the Old World divvied up Africa
amongst themselves. This
placed the economies of Africa firmly into the hands of trans-national
corporations like Unilever, Colgate-Palmolive, Coca Cola, and Exxon. In the Third World, privatisation
is wrenching resources off the hands of public corporations, and
transferring them into the eagerly waiting hands of trans-national
companies.
In these days of globalisation, emerging
markets, and the development of information and communication technology,
the corporations of the West, especially in their bid to avoid the high
cost of labour in their home countries, have opted to ship out their
donkey work to the poor folks in the poor countries. But they retain the ownership of
the corporations in their metropolitan capitals. You probably have a friend who
works as chief executive officer of a trans-national corporation in
Africa, but who receives daily instructions from his metropolitan
principals through daily correspondence by e: mail. The economies of the countries
that gain from outsourcing of jobs are necessarily appendages of the
nations that brought the jobs.
Indeed, growth of their GDP is a function of the good health of
the metropolitan powers.
The West concentrates on ownership of
capital, and the awakening of its frontiers and entrepreneurial
spirit. And the highly
volatile and highly competitive international commodity and capital
markets prevent the Third World from accumulation of financial
muscle. Both conditions
limit, and consign the Third World to the yeoman’s labour. The truth is that the commonwealth
- and the top paying jobs - of the world will still remain with the
West.
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