‘Offshoring’ Has Its Trade-Offs

The offshoring of US jobs is becoming a hot topic in political and economic debates. Earlier this week, President Bush's top economic advisor, Greg Mankiw, weighed in on the controversy by claiming that the offshoring of service jobs - like software design - to India and other countries can only make US businesses stronger. But that's not necessarily the case, says Steven Pearlstein in this Washington Post article. While a company may gain a short-term comparative advantage over its competitors, once everyone does it, no one is any better off than anyone else. Rather than cutting costs to obtain brief advantages or to meet exaggerated earnings expectations, Pearlstein says, top executives should get back to the basics of business management and recognize that a great deal of innovation, competitiveness, and efficiency can come from existing employees within their own company. Once key services are sent overseas, he says, a company is much less able to capitalize on the strength of its people. - YaleGlobal