The SanityPrompt

This blog represents some small and occasional efforts to add a note of sanity to discussions of politics and policy. This blog best viewed with Internet Explorer @ 1024x768

Thursday, July 07, 2005

Components of a Democratic Response to Outsourcing

Here's an interesting article and embedded within it some ideas for how Democrats can respond to the outsourcing issue outside of complete protectionism.

Outsourcing flops blamed on tunnel vision

Hidden costs, high staff turnover and poor cross-cultural communications are the key causes of offshore outsourcing failures, according to new research from analyst house Gartner.

The analyst report predicts global spending on offshore outsourcing services will top $50 billion by 2007 but it warns too many companies are rushing into deals on the promise of unrealistic cost savings.

The biggest mistake that is common to all offshore outsourcing failures is to base the business case solely on reduced labor costs.

"Many hidden costs--including expenses associated with infrastructure, due diligence, communications, governance, overseas travel and cultural training--will offset the cost advantage of wage differentiation," the report said.

Essential planks of a future platform need to address

Improved corporate governance and better safeguards for creditors, employees and shareholders.
More funding for education, training, and transition assistance
More transparency in credit and equity markets
Greater attention to infrastructure, particularly communications infrastructure
Health care costs reduction efforts to lower the cost of American labor


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