Saturday, September 17, 2005

Net Benefits Of Offshoring

The political debate on offshoring focuses on the supply side – loss of UK and US jobs to foreigners. But balancing these losses are advantages to consumers – cost reductions and better service, as the example below illustrates.

First, the theory, in a Georgetown Public Policy Institute report on outsourcing IT in the New Economist:

In summary, most studies find the extent of job losses from services offshoring relatively small in the aggregate, but somewhat concentrated in a few industries and occupations. The job losses stem from both a direct impact of offshoring, which displaces some workers, plus an indirect impact through the productivity enhancements that it provides. However, there are still unanswered empirical questions, including the just-mentioned productivity effect.

Hmm, that’s pretty definitive!

Anyway, here’s my experience. A German friend (yes, I do still have some) is soon to celebrate a Very Special Event. She has 9 year old Dell PC, so it’s time for a processor box upgrade. I’ve never had a bad experience with Dell desktops, so checked out the Dell UK and Dell Germany websites, selected configurations, and called them.

Dell UK patched me through to an Indian salesperson who in fewer than 10 minutes figured out a price and delivery from UK to Germany. Only problem was the choppy VOIP connection.

The shipping cost from the UK to Germany was high, so I called Dell Germany. Navigated their German IVR system using my very basic German, and got connected to a salesperson in Eastern Europe who spoke perfect English. The VOIP was better than the UK service. In a 10-minute transaction, I fixed the specification, payment (amazingly easy) and shipment. Pricing was very good and beat the UK, so I confirmed the order. The only hard part was reading the subsequent German language emails confirming the order and Dell's customer satisfaction survey. But Babelfish came to the rescue.

So, here’s the equation:

  • UK and Germany lose 2 jobs – only a problem for Germany since UK has full employment

  • I can order in the country in which I want the product delivered, and work in English

  • India and Eastern Europe gain 2 jobs, growing their economies, increasing their own imports, and adding to their political stability (only China plans on making war on its customers).

  • Dell gets keener prices, so I buy more (1Gbyte RAM, 160Gbyte HDD).

Looks like a net plus to me.

For the avoidance of doubt, I have no friends, family or neighbors working for Dell and have never had any business dealings with them except as a consumer.