WASHINGTON (Reuters) - Chief executives at U.S. companies that shipped jobs overseas won a 46 percent pay hike last year, more than five times the average CEO raise, while ordinary workers' paychecks barely budged, a study showed on Tuesday.
According to that, the execs are just running with the savings instead of helping the company perform. 8-P
http://www.reuters.com/newsArticle.jhtm ... ID=6108458
hmmm, outsourcing, does it help?
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Ahzz
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hmmm, outsourcing, does it help?
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Jassmine(SO)
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Howdy Y'all,
Great post Ahzz
Those numbers are shocking to say the least!!
Outsourcing may be good for a corporations bottom line, and the CEO's pocket, but I just can't see how it helps the average joe 
Seems to me it is doing much more harm than good 
*Hugs & Love* 
Great post Ahzz
Those numbers are shocking to say the least!!
Outsourcing may be good for a corporations bottom line, and the CEO's pocket, but I just can't see how it helps the average joe Seems to me it is doing much more harm than good *Hugs & Love*
Blessings Eternal, Jassmine
"Love is unconditional acceptance. That quality is also our essential nature, who we really are."
--Peter Shepherd
"Love is unconditional acceptance. That quality is also our essential nature, who we really are."
--Peter Shepherd
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Lorna
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This does not suprise me at all.
Outsourcing may be profitable for the big corporations & their CEOs, but it basically spits in the face of the middle class. And where do think these corporations made their money to begin with? It's the middle class who purchases their goods and services!
While outsourcing may seem like a good practice from a business end, it is neither moral nor ethical, especially in times where millions within the US are out of work and struggling.
And that just does not sit well with me at all.
Outsourcing may be profitable for the big corporations & their CEOs, but it basically spits in the face of the middle class. And where do think these corporations made their money to begin with? It's the middle class who purchases their goods and services!
While outsourcing may seem like a good practice from a business end, it is neither moral nor ethical, especially in times where millions within the US are out of work and struggling.
And that just does not sit well with me at all.
Live it. Love it. OWN IT.
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Gaven McLaren
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You are all saying outsourcing is bad. Yes and no. Foreign outsourcing is bad because it take money out of the US economy. Outsourcing to US companies is good because it still keeps US money in the US economy. The company I currently work for does internet outsourcing for ISP's.
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Ahzz
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I think you misunderstand my point. When a companie outsources JUST to put more money into the top 10 people's pockets, it's only doing harm. A company has a duty to protect it's assets yes? Well, people are also assets in a company. When those assets are discarded solely for monetary gain that isn't wisely used, then it's a harmfull thing. It leaves the remaining employees fearfull for their jobs. This harms productivity. With productivity down, the company that outsourced and just pocketed the change without reinvesting it has a net loss of profitability. This net loss of profitability is directly in opposition with the primary mandate of the company, which is to maximize the return of the investors/owners money put into the company.Gaven McLaren wrote:You are all saying outsourcing is bad. Yes and no. Foreign outsourcing is bad because it take money out of the US economy. Outsourcing to US companies is good because it still keeps US money in the US economy. The company I currently work for does internet outsourcing for ISP's.
The problem with outsourcing isn't that it exists, or that it takes jobs elsewhere. The problem is in HOW and WHY it is being done. I'm certain that most people can agree with this stance.
The whole point of the article was to show that in the majority of cases the savings from the outsourcing has not gone back into the company but rather into the pockets of the top dogs. They are pointing out a self destructive action that flies in the face of their mandate as leaders of a company.
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Angie
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A friend and I were discussing the issue of outsourcing last night, given that we work for different Fortune 500 companies and have been directly involved with outsourcing efforts. First, let me state that I don't like the practice, either, and narrowly averted being outsourced several months ago. I simply understand the rationale for outsourcing in some cases.
Do company execs stand to gain from outsourcing? Yes, in the same way that they would if they implemented any program to reduce costs, boost productivity or bolster profits. Sad, but true, a company is not in the business of providing jobs, its goal is revenue generation. Gone are the days when company loyalty was rewarded with a "job for life". Cliche though it is, the global marketplace has grown far too competitive to enable "monolithic" companies to respond quickly to threats from other firms. In response, companies are now focusing on core competencies and outsourcing ancillary tasks to companies that focus on that particular area (manufacturing, accounting, information technology, etc.). It's important to note that firms regularly outsource to on-shore (domestic) and offshore providers. The offshore outsourcing gets the lion's share of attention.
For example, I work for a manufacturer of packaged consumer goods. Ten years ago, we controlled the process from raw materials to marketing. Gradually, we began shutting down manufacturing facilities and negotiated contracts with other firms (mostly in Latin America) to produce the actual product. We are, for all intents and purposes, a design and marketing enterprise.
Economic theorists will tell you that the net effect of all this outsourcing behavior will be that economies in all nations will eventually reach some state of equilibrium (i.e., third world economies will strengthen, while first world nations may see a slight decline). I don't know if I accept that reasoning, but it is a fact that many companies are searching for cheaper alternatives to traditional resources of contract labor such as India because workers there have begun demanding higher wages.
That said, I agree that the loss of jobs in the US will have a negative impact on the global economy. If we can't afford to purchase goods and services, what country can rise to consume what's being produced? China, perhaps, but not without a more stringent plan of market/political reforms.
The article cited statistics produced by the Communications Workers of America (i.e., a labor union). Certainly no surprise as to the conclusions presented. Granted, members of the Bush cadre, such as Gregory Mankiw, also try to put their best spin on the outsourcing debate, though he almost made backpedaling an Olympic sport after his comments earlier this year. Ah, what I would give for a real "fair and balanced" news outlet, but that's a rant for another time.
In the end, I suspect that many U.S. workers will either work for an outsourcing firm or will be employed in a field where outsourcing is still impractical (such as health care). While I admire some of the efforts of those who regularly protest WTO conclaves, I believe the "consume at all costs" mentality which is rapidly spreading across the globe will only continue to foster the need for competitive advantage and, thus, outsourcing.
Rambling as usual,
Angie
Do company execs stand to gain from outsourcing? Yes, in the same way that they would if they implemented any program to reduce costs, boost productivity or bolster profits. Sad, but true, a company is not in the business of providing jobs, its goal is revenue generation. Gone are the days when company loyalty was rewarded with a "job for life". Cliche though it is, the global marketplace has grown far too competitive to enable "monolithic" companies to respond quickly to threats from other firms. In response, companies are now focusing on core competencies and outsourcing ancillary tasks to companies that focus on that particular area (manufacturing, accounting, information technology, etc.). It's important to note that firms regularly outsource to on-shore (domestic) and offshore providers. The offshore outsourcing gets the lion's share of attention.
For example, I work for a manufacturer of packaged consumer goods. Ten years ago, we controlled the process from raw materials to marketing. Gradually, we began shutting down manufacturing facilities and negotiated contracts with other firms (mostly in Latin America) to produce the actual product. We are, for all intents and purposes, a design and marketing enterprise.
Economic theorists will tell you that the net effect of all this outsourcing behavior will be that economies in all nations will eventually reach some state of equilibrium (i.e., third world economies will strengthen, while first world nations may see a slight decline). I don't know if I accept that reasoning, but it is a fact that many companies are searching for cheaper alternatives to traditional resources of contract labor such as India because workers there have begun demanding higher wages.
That said, I agree that the loss of jobs in the US will have a negative impact on the global economy. If we can't afford to purchase goods and services, what country can rise to consume what's being produced? China, perhaps, but not without a more stringent plan of market/political reforms.
The article cited statistics produced by the Communications Workers of America (i.e., a labor union). Certainly no surprise as to the conclusions presented. Granted, members of the Bush cadre, such as Gregory Mankiw, also try to put their best spin on the outsourcing debate, though he almost made backpedaling an Olympic sport after his comments earlier this year. Ah, what I would give for a real "fair and balanced" news outlet, but that's a rant for another time.
In the end, I suspect that many U.S. workers will either work for an outsourcing firm or will be employed in a field where outsourcing is still impractical (such as health care). While I admire some of the efforts of those who regularly protest WTO conclaves, I believe the "consume at all costs" mentality which is rapidly spreading across the globe will only continue to foster the need for competitive advantage and, thus, outsourcing.
Rambling as usual,
Angie
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Ahzz
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You are correct about the intended use of outsourcing. However I have to point out what the article was saying. The majority of large companies that are doing the outsourcing are NOT using the savings to the betterment of the company. Sure they may be going from operating int he red to operating in the black. But what is annoying is that anything OVER that "get into the black" borderline is going into the execs and board pockets instead of into the company coffers for other expences.
How many people have seen product quality go downhill? How many times have you hung up in frustration over tech support people that can't speack english well enough to be understood by an average american?
My point is that these savings should be going towards making the companies BETTER at what they do, not towards ratcheting up someone's salary at the top by a gross margin. If the savings from outsourcing are used only for making the top honchos rich then it's wrong. It's an insult to the people that helped to make that company what it is. Please note that the dividends being paid out to the shareholders haven't changed. If they had, that companies stock would be worth a good bit more than it is.
Like anything else, outsourcing is a tool. It is what they doing with that tool and the resulting savings that is pissing everyone off including myself.
As far as the theory that the global economy will settle off with rich nations getting poorer int he middle/lower class, and poor nations getting richer, just take a look at a: america's average pay has DROPED $1,900 since 2,000, and India's average pay has RISEN $2,500. And that's just with the curent LIGHT off-shoreing.
Also, there is a HUGE difference between offshoring and outsourcing. Offshoring is the act of avoiding the minimum wage laws here by hiring overseas workers that aren't protected from exploitation. I fully believe that paying $20/hr for programmers in India (which the programmers average only $10/hr) is exploitation. Just like sweat shop workers.
So, long story short....
Penalize the companies that just pocket the savings into their top-10 employees pockets and reward those that put the savings back into the company to make it better.
Ok, enough of my own rant on the morals of companies.
How many people have seen product quality go downhill? How many times have you hung up in frustration over tech support people that can't speack english well enough to be understood by an average american?
My point is that these savings should be going towards making the companies BETTER at what they do, not towards ratcheting up someone's salary at the top by a gross margin. If the savings from outsourcing are used only for making the top honchos rich then it's wrong. It's an insult to the people that helped to make that company what it is. Please note that the dividends being paid out to the shareholders haven't changed. If they had, that companies stock would be worth a good bit more than it is.
Like anything else, outsourcing is a tool. It is what they doing with that tool and the resulting savings that is pissing everyone off including myself.
As far as the theory that the global economy will settle off with rich nations getting poorer int he middle/lower class, and poor nations getting richer, just take a look at a: america's average pay has DROPED $1,900 since 2,000, and India's average pay has RISEN $2,500. And that's just with the curent LIGHT off-shoreing.
Also, there is a HUGE difference between offshoring and outsourcing. Offshoring is the act of avoiding the minimum wage laws here by hiring overseas workers that aren't protected from exploitation. I fully believe that paying $20/hr for programmers in India (which the programmers average only $10/hr) is exploitation. Just like sweat shop workers.
So, long story short....
Penalize the companies that just pocket the savings into their top-10 employees pockets and reward those that put the savings back into the company to make it better.
Ok, enough of my own rant on the morals of companies.
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Angie
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I didn't intend to defend the actions of CEOs who line their pockets with savings reaped from outsourcing. To be sure, executive compensation is an area that deserves (and has gotten) closer scrutiny from stockholders and the SEC alike. What I don't see in the article is a blanket statement that the savings achieved do not flow back into the company in some fashion other than filling the CEO's coffers.
As I said before, in many cases a company is able to leverage more qualified talent at the same price by outsourcing to a service provider that specializes in that particular business function. We recently outsourced our mainframe data center to Big Blue for cost containment purposes and as a "proof of concept" to see if promises of savings and productivity gains were legitimate. Time will tell. Would I be angry if my job was sent overseas? You bet! But at the same time I wouldn't automatically assume the "the man" was out to gain at my expense.
As for offshoring being a different beast than outsourcing, well, that depends on whom you ask. Most business writers define two types of outsourcing: onshoring and offshoring (see "Will You Survive the Services Revolution", Harvard Business Review, 6/2004 as one example). Some writers do make a distinction, casting offshoring in a more unethical light. I recently completed a class on IT topics in which we covered a great deal of material relating to outsourcing. Again, in the majority of the publications, offshoring was just another term for global sourcing or international outsourcing.
Yes, rates of pay are increasing in countries with a large base of talent at a faster rate than those of their US counterparts, but, let's face it, when you start out at the bottom, gains can be made very quickly in contrast to a more "mature" economy and compensation structure as we have in America. Workers in other countries are beginning to flex their muscles and demand higher pay rates. Public Radio International's Marketplace radio series featured a report this evening on how Chinese workers are becoming more selective in what companies they choose to work for based on pay rates and working conditions. The basic law of supply and demand seems to hold true.
I, too, see outsourcing as a tool, if applied correctly. I'm also a realist. One only needs look at what happened to the manufacturing job base to realize that protectionist legislation and tariffs do nothing to stem the tide. It all comes back to who delivers the best product at the most competitive price in the most expeditious manner (and who contributes the most to a given political campaign).
As Americans, we have been blessed with a standard of living envied by most of the world and grown somewhat complacent in the process. Now we need to roll up our sleeves and deal with the issue head-on. We can either stop purchasing from manufacturers who offshore significant portions of their operations or we can take a page from Emerson and build a better mousetrap.
Wearing panties made in the good 'ol US of A (I think),
Angie
As I said before, in many cases a company is able to leverage more qualified talent at the same price by outsourcing to a service provider that specializes in that particular business function. We recently outsourced our mainframe data center to Big Blue for cost containment purposes and as a "proof of concept" to see if promises of savings and productivity gains were legitimate. Time will tell. Would I be angry if my job was sent overseas? You bet! But at the same time I wouldn't automatically assume the "the man" was out to gain at my expense.
As for offshoring being a different beast than outsourcing, well, that depends on whom you ask. Most business writers define two types of outsourcing: onshoring and offshoring (see "Will You Survive the Services Revolution", Harvard Business Review, 6/2004 as one example). Some writers do make a distinction, casting offshoring in a more unethical light. I recently completed a class on IT topics in which we covered a great deal of material relating to outsourcing. Again, in the majority of the publications, offshoring was just another term for global sourcing or international outsourcing.
Yes, rates of pay are increasing in countries with a large base of talent at a faster rate than those of their US counterparts, but, let's face it, when you start out at the bottom, gains can be made very quickly in contrast to a more "mature" economy and compensation structure as we have in America. Workers in other countries are beginning to flex their muscles and demand higher pay rates. Public Radio International's Marketplace radio series featured a report this evening on how Chinese workers are becoming more selective in what companies they choose to work for based on pay rates and working conditions. The basic law of supply and demand seems to hold true.
I, too, see outsourcing as a tool, if applied correctly. I'm also a realist. One only needs look at what happened to the manufacturing job base to realize that protectionist legislation and tariffs do nothing to stem the tide. It all comes back to who delivers the best product at the most competitive price in the most expeditious manner (and who contributes the most to a given political campaign).
As Americans, we have been blessed with a standard of living envied by most of the world and grown somewhat complacent in the process. Now we need to roll up our sleeves and deal with the issue head-on. We can either stop purchasing from manufacturers who offshore significant portions of their operations or we can take a page from Emerson and build a better mousetrap.
Wearing panties made in the good 'ol US of A (I think),
Angie
I misunderstood part of your post then. Sorry bout that. ;-P