The Other Side of Outsourcing
(March 17, 2004)

I have a confession. I have been actively involved with outsourcing for almost 12 years.

I extend my wrists. Slap on the handcuffs and take me away.

Election-year rhetoric has beamed the spotlight on outsourcing as Americans grapple with how and why so many products get manufactured in China and other low-wage havens.

The prevailing mood has become one of blame for companies that dare to satisfy the cravings of American consumers for low-cost goods. Carl Tannenbaum, chief economist for LaSalle Bank, recently addressed the Turnaround Management Association in Chicago and asked if they or any family members had shopped recently at Wal-Mart or Sam's Club. Of course they had - because they wanted to save money.

But, beyond the consumer demand question, outsourcing is so embedded in America that it's hard to understand what all the fuss is about.

Prairie Oak, as an example, has been in business since 1992 because of clients who had a need to outsource certain projects. My neighbor, the plumber, has made a good living by helping to fix pipes and sinks for companies that didn't feel it was appropriate to have a plumber on staff full-time. Another neighbor, the lawyer, feeds his family because of clients who need his service on occasion.

It's called delegation. Managers find someone to help them because they are in charge of ensuring that things get done without personally doing the work. Prairie Oak had a client a few years ago who asked us to sign up with American Express so that our invoices could be processed through a corporate card account. The client was outsourcing the work and eliminating in-house accounts payable staffing.

Perhaps it sounds heartless to contend that outsourcing need not be a dirty word. After all, more than 2 million manufacturing jobs have vanished in the United States in recent years. But can you paint with a broad brush and truly say that each of those jobs was taken by China's growth, or perhaps in part by the relentless push for greater productivity (via software, quality improvements, robotics, streamlined systems, etc.)?

Though political candidates may try to reduce the question to simple sound bites, there is no simple answer. But business people can help to define the debate.

Between now and November, business leaders need to do a better job of explaining their decisions on outsourcing - so employees, community members and politicians will understand the valid and valuable reasons for using outside help.