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JULY 31, 2006
By Jack and Suzy Welch Outsourcing Is Forever The issue for the U.S. economy isn't outsourcing -- it's bringing in more talent from overseas How can we change things in the U.S. so we don't have to outsource to India and other countries anymore? -- Anonymous, Orlando We can't -- and we shouldn't. Look, the debate over outsourcing should be over by now. It was pretty much all about politics to begin with. The question now is not how do we stop outsourcing, but how do we use outsourcing to enhance competitiveness in what is, and forever will be, a global marketplace? Of course, outsourcing has not been painless: Layoffs hurt. Still, they have to be seen as part of a broader picture, one in which outsourcing is not only integral to the world economy but crucial to our own growth. Integral because economies always respond to consumer demands. People have come to expect the lowest price and the highest quality in one package. And companies can't deliver on that expectation without moving around the world to capture cost advantages and innovative minds. As for the impact of all this on the U.S., well, it's pretty hard to criticize. Since mid-2003 the American economy has grown about 20%. That's more than $2.2 trillion -- equal to the size of the total economy of China. Seven million jobs have been added. Wage growth has accelerated from 1.5% in early 1994 to more than 4% in the last year. These statistics, you can be sure, mean that outsourcing's opponents, many of whom disappeared into the woodwork even before the 2004 election, will not be out there in the 2006 campaign. Those foes had predicted American technology jobs would migrate in hordes. In fact, tech jobs have increased 17% from the pre-bubble 1999 level. No wonder most politicians now tout the overall benefits of an integrated global system. If there is a problem with the U.S. economy right now, it is not the loss of jobs because of outsourcing. It is the shortage of skilled labor because of immigration restrictions. Indeed, if Congress really wanted to make our economy more competitive, it would raise the limits on H-1B visas, making it easier for educated foreigners to work here. Ideally, the whole program could be replaced by a permanent green card system that would draw skilled workers into a more positive, long-term relationship with the American culture -- and ultimately build a better economic future for all of us. So forget outsourcing. America's labor challenge today is talent insourcing. I am a 29-year-old biochemist who works at a small company founded by my father 32 years ago. We haven't grown for some time, and I worry we could disappear altogether. My father and I have no management experience and can't seem to make our dreams come true. Will it help if I get an MBA or update my technical knowledge? -- Marcio Luz de Oliveira Jr., Vitoria, Brazil Unlikely. Your problem is too big, and time is too short. Instead, you need to accept the fact that you have reached a moment-of-truth juncture in the evolution of many startups and family-run ventures. A unique technology or product, plus passion and momentum, can take you only so far. Now, you need help -- from the outside. Don't panic. Get out there and find a star CEO. Yes, that step can be an anathema for owners and entrepreneurs in your situation, but it usually hurts only at the beginning as you iron out new roles and relationships. After that, it can be all upside, as newcomers, with their experience and hunger for change, find the route to growth that has eluded you. And you, incidentally, are in a particularly fortunate position. The star you need could come from your industry. Big Pharma is having its own growth problems. Because of that, there are lots of talented executives who would likely jump at the chance to transform a floundering, family-operated biotech company. Of course, to attract such a change agent, you will need to give something up. You and your father, for instance, may have to let go of daily operations, hiring, and strategic planning. You will also have to let go of some equity. You simply cannot reel in a great outside CEO without giving him or her a piece of the action. The good news is, if your new star does the job well, you all win, financially and otherwise, as the company grows and thrives. Yes, letting go can be scary. But there's really nothing to fear, since you and your father will retain majority control of the company. Just be sure to use that control judiciously. Remember, you hired that star executive not to obey you -- but to save you.  Jack and Suzy Welch look forward to answering your questions about business, company, or career challenges. Please e-mail them at thewelchway@BusinessWeek.com For their podcast discussion of this column, go to www.businessweek.com/search/podcasting.htm
BW MALL
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