Monday, February 16, 2004
previous entry | main | next entry | TrackBack (2)
Europe and outsourcing
How is Europe dealing with outsourcing? This article provides an interesting clue:
[Sure, that's what European firms are doing. But the European Union is cheesed off, right?--ed. Not according to this report:
UPDATE: This trend of European outsourcing to the United States is consistent with this editorial by Michael Walden from two weeks ago. The highlights:
Chris Patten was the last colonial governor of Hong Kong before the Red Chinese took over. This might explain his free trade views. However, are we sure that Patten truly speaks for all of the Old Europeans? I have serious doubts. This would be very good news, if accurate. Shucks, I might even have to say something nice about the Old Europeans. It might ruin my day!posted by: David Thomson on 02.16.04 at 02:35 PM [permalink]
From the article, it's not clear how much of this is pure outsourcing (getting another company to take over a function) vs outsourcing combined with offshoring (also having the function done in another country).posted by: David Foster on 02.16.04 at 02:35 PM [permalink]
Two propaganda articles proving exactly nothing. Is young Doctor Drezner clasping at straws in his elitist delusions?
I especially liked the off-the-wall definition of outsourcing by that North Carolina state employee. Just come up with your own definition and the problem goes away.posted by: Mik on 02.16.04 at 02:35 PM [permalink]
(1) The quoted articles show that the politicians and financiers in Europe love offshoring (no surprise there). It says nothing about the opinions of the average European on the street. I'll bet that a similar article could be written about American offshoring, but it would totally overlook the grassroots opposition to this destructive activity.
(2) If the Europeans are indeed more open to outsourcing than Americans, perhaps it is due to the fact that they have more protections for the laid-off worker. Unemployment benefits are typically more generous than in America, and healthcare is not tied to employment, so the laid-off worker need not face the double whammy of unemployment and no health coverage. I'm not saying we should adopt these programs here, but it is almost certain that their existence helps to make the loss of jobs overseas more palatable.posted by: Firebug on 02.16.04 at 02:35 PM [permalink]
Dan is again correct. The Europeans are at least as far along in outsourcing (and offshoring) as we are. In general, the UK is furthest along, but there is plenty of outsourcing done by the French, also the Dutch. Much of the BPO work is done in Poland, some also in Slovakia and Hungary.
The poster "Firebug" is partially correct: offshore outsourcing is not nearly the issue in France as it is here because of social policy and benefits to some extent. The other side of the coin is that many French workers would prefer to work less or not at all, and collect a relatively small check from the state, than to scramble to preserve a job and a slightly larger check.
The are some methodological questions to clear up here, aren't there?
"Jobs created by US companies in other countries" could include jobs held by American nationals, could they not? They could also include jobs that are outsourced because that is the only way they can physically exist; an American company owning Canadian timber that is exported to the United States has to create jobs in Canada (unless, I suppose, it uses extremely long chainsaws to cut the trees down). Finally, they could include the somewhat murky category of jobs with employers that have been acquired by American companies. Acquisition need not change the number of jobs at all, but it would affect this metric. All three conditions would necessarily apply to jobs defined here as "insourced," created in the United States by foreign-owned companies.
I'm not necessarily making a policy argument here, only a suggestion that the metric Walden is using requires some refinement before it can be considered on-point with respect to outsourcing.posted by: Zathras on 02.16.04 at 02:35 PM [permalink]
You're confused, Dan, about the difference between outsourcing and offshoring.
If a European company outsources a function to IBM, it doesn't imply that the work is moving to the US. What may happen is that the employees simply become IBM employees.
Something tells me that IBM isn't going to be hiring a bunch of Finnish speakers to staff a helpdesk operation in Boca Raton.
Chances are, the Nokia jobs are staying in Finland, not moving overseas.
Companies have been outsourcing things like janitorial service and security for quite a while. The jobs, and often the personnel, stay the same. It should be obvious that these jobs, while outsourced, aren't sent overseas.
The current Märklin toy train catalog makes a big splash about how they are NOT outsourcing, but have kept 90% of their "value-add" within Germany.
Reading articles by so-called financial "pundits" does not necessarily or perhaps even often give an accurate view of public sentiment in that country.
The difference between outsourcing and off-shoring that was pointed out in this thread is extremely important.
Post a Comment: