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July 12, 2003

Forbes editor defends offshore outsourcing

Michael S. Malone, the former editor-at-large of Forbes ASAP magazine, has advised Americans against making a "scapegoat" out of offshore outsourcing of services.

"Suddenly, global terrorism is taking back seat to what is being billed as a new kind of "economic terrorism," the offshore movement of U.S. high-tech jobs to India (as well as China, Thailand, Indonesia, Poland, Costa Rica and Vietnam)," has says in his column for Naturally, he follows this with (the one and only) Forrester Research group's "prediction" that 3.3 million U.S. service industry jobs--including one million IT jobs--will move to other countries over the next 15 years. "The usual cranks on the left and right are angrily posting messages calling for economic war against India and solemnly mourning the impending death of the United States. And, of course, politicians are dealing with this scandal du jour in their usual ham-fisted way," he says.

Malone cites the benefits accrued by the outsourcing of electronics hardware manufacture (to countries such as Taiwan) to bolster his case for the offshore outsourcing of services as well. "Would the United States economy have been better off if we'd thrown up tariff barriers two decades ago against offshore PC assembly or contract semiconductor fabrication? On the contrary, allowing that natural market process to occur drove down costs, which in turn opened the door to the creation of thousands of new U.S. tech companies, and millions of new domestic jobs. The key was that we kept the innovation and we maintained the world's best environment for new company creation," he adds.

Malone's final prescription for America: focus on value-addition rather than artificially saving low-end jobs--something that is going to be futile in any case.

"Will this transformation be painful? Of course it will; it always is. Many hard-working Americans (including a lot of those new Americans) will lose their jobs. But, history shows that those jobs will be eventually be lost anyway, no matter how many artificial barriers we put up to keep them. The hard fact is that we can only move on to new jobs. Whether those jobs will be better or worse depends upon the decisions we make right now. If we try to hang on to jobs that are no longer competitive on the world stage, we will lose. But if we can leverage those lost jobs into future gains in new, better jobs and talented immigrants, then we win."

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