What exactly is outsourcing and how in the world could health care reform play a role?
Wikipedia has an informational page about Outsourcing that is a good source of general information concerning this: “subcontracting a service, such as product design or manufacturing, to a third-party company.” This definition, used in the first sentence of the page, shows how much this process does to help ‘Big Businesses’. Subcontracting is something that few small businesses can afford to do in order to get their products out to the public for sale. Additionally, many small businesses are family owned and operated, contribute to their local economy, and therefore, the business owners do not wish to outsource jobs. Quality control becomes an issue as well. When a business has been built on family pride, there is a great deal of psychological investment in quality of the product. This is a feature of small businesses that is frequently lost with the big corporations. The bigger the business, the farther away from the product are those people who make the decisions that affect quality control.
“The decision whether to outsource or to do inhouse is often based upon achieving a lower production cost, making better use of available resources, focusing energy on the core competencies of a particular business, or just making more efficient use of labor, capital, information technology or land resources.” In short, to make more in profits!
Outsourcing can be done within the boundaries of the United States OR it can be done in other countries. If services/jobs are outsourced within the United States, all companies have a fairly even playing field. The application of outsourcing without the boundaries of the United States is where a potential for ‘unfair advantage’ exists. Unfair advantage for the United States worker, that is!
If anyone is unaware of the vast number of U.S. jobs that have flown away to land in foreign countries, it does not take much effort to find information on the internet. EarnMyDegree.com hosts a webpage that begins by identifying many of the types of jobs that are currently being outsourced and some jobs that may be considered safe from outsourcing. Suffice it to say that the analysis of likely to be “safe from outsourced” jobs are all focused on services that required ‘either face-to-face or hands-on contact. Doctors, nurses, teachers, physical therapists, dental assistances, child-care workers, etc. are all likely to be safe from the threat of outsourcing. However, they are not safe from the negative effects of outsourcing.
What negative effects you ask? How can businesses saving money which can result in lower overall costs to consumers be bad? How about the number of unemployed people, the number of people having to use government services, the loss of competition (just how long do you think those prices will stay low when their is no competition?), and the loss of those small businesses that have been the centers of communities since the founding of this country?
Articlesbase.com has a Feb. 5th 2009 article Concept of Back Office Outsourcing Jobs in the Insurance Sector that provides an example of how outsourcing is being marketed as a good thing. In this instance, the argument is presented that Auto Insurance Companies do not have the time to handle everything efficiently, and that good customer service demands that jobs be outsourced to countries such as India where a .. “good outsourcing company can help their clients in many ways to keep track of their records, which usually get piled up in a normal office scenario, in the areas of book keeping, accounting, financial reporting, content digitization, etc. with perfection”. Further noted in the article is “Now a days many of the Auto Insurance companies abroad have started outsourcing their back office jobs to Indian companies as a strategic idea to cut down costs and they get easy access to intellectual caliber of the people in India.” While those may all be good arguments, where does the loss of jobs for citizens of the United States come into play? Where does the loss of federal, state and local tax revenue come into the equation? It is clearly a case of “Big Business” looking at their profit margins rather than striving to be good citizens.
Another discussion on outsourcing appears in The New York Times where an article in their World Business Section August 11, 2008 (by Heather Timmons) Cost-Cutting in New York, but a Boom in India can be found. This author looks at the ways in which Wall Street businesses is cutting some of their overhead by outsourcing many jobs, including research, to companies in India. Ironically, many of the U.S. companies noted in the article are also those firms which have recently received U.S. taxpayer support. This leaves us in a situation where U.S. taxpayer money is now being used to outsource U.S. jobs creating further job loss in the U.S. and effectively serving to cut (or at best, hinder the growth of) the very same tax base that helped those Wall Street companies stay afloat and paying all those bonuses to those those they are keeping state side.
One of the most telling lines in that New York Times article is on page 2: “There’s a huge amount of grunt work that has been done by $250,000-a-year Wharton M.B.A.’s… Some of that stuff, it’s natural to outsource it.” Okay, I give up. Why do managers of very large, very profitable businesses have $250,000-a-year M.B.A.’s doing grunt work? Is this how they manage the rest of their business? If so, it is a miracle we are not in worse shape economically than we are right now. Don’t we have enough people in our own country to do ‘grunt work’ without having to send it overseas? If you’re going to outsource, why not outsource it to companies right here in the good old U.S.A.?
Perhaps the largest reason why U.S. jobs are migrating overseas is because of the cost of health care! The United States is the only industrialized nation that does not have a universal health care system. Health care in China runs an average annual cost of approximately $7.00 per person (NO THAT IS NOT A TYPO). Of that annual cost, 40% ($2.80) is paid by the central goverment, 40% ($2.80) is paid by the provincialgoverment, and 20% ($1.40) is paid by the individual. India has a universal health care system hosted by state/territorial governments. By purchasing an outpatient card, the individual receives free outpatient care. Hospital treatment is calculated based upon an individual’s income level, with costs waived for those below the poverty level. More examples and further information on these can be found at wikipedia’s universal health care site.
Given the fact that employer provided health care is not an issue in those countries where U.S. jobs are being outsourced at a rapid pace, maybe it is time for our elected officials to get a clue. Universal health care or at least the public option, could keep U.S. jobs in the U.S. Maybe we would not have so many citizens out of work. Just something to think about.
