Magazine

The Hidden Costs Of Outsourcing


For the past 12 years, I've owned a company employing 35 people who write code and build custom databases. They are all graduates of U.S. schools and are U.S. citizens. Therefore, I feel compelled to point out some facts about outsourcing.

First, code-writing is not done as a discrete "service," isolated from the rest of product or process design. It's an integral part of the total human effort of innovation. When you attempt to outsource it, you also give away all of the intellectual property that surrounds its creation, from engineers' knowledge to management strategy.

Second, I read with incredulity the remarks of those who would have us believe that low labor rates form the full basis of a software outsourcing decision. When one adds up the impact of added engineering-liaison activity, translation problems, remote-management requirements, and the potential for loss of proprietary rights, it is difficult to see why we would want to lay off our U.S. talent base in favor of nurturing that of other countries. Add the financial burden of paying unemployment to our citizens, and I'll wager that we have a negative net result.

To be giving away our strategic superiority is a one-way ticket to losing the competitive battle. To be defending these actions with false economics and half-truths about "service" work is shameful.

John F. Schickler

Rochester, N.Y.


Toyota's Hydrogen Man
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