Should Americans provide outsourcing services?
I think it would be a great exercise to have Americans set up outsourcing services, or mock simulated outsourcing business models to understand the metrics of land, labor, and other costs involved in staying competitive in a global market. What people will quickly find out, is that to stay ahead, you have to either be really cheap, really efficient, really good, or really sophisticated.
Its not all about price!
People around the world think that business is mainly about price competition, and nothing could be farther from the truth. If you go to the supermarket, the lower cost yogurt sits on the shelf while Yoplait gets hoarded. Yoplait probably costs more than double ounce per ounce, but you can’t get people to stop buying it . Why? It tastes good, its drinkable, fashionable, and comes in a cool container — thats why. People want what they want and are willing to pay more to get what they want than a boring bare-bones standardized product. i-phones are selling off the shelf while simpler phones that could be sold for $10 at a profit don’t even exist at shops anymore. People want fancy stuff and couldn’t care less about saving money, and that includes the poor too.
So, if an American company tried to compete with all of these foreign outsourcing businesses in the international market, how would we compete? What would we do? Competing on price would be futile, but there are many other ways to compete.
Languages. Every language known to mankind (and some not known) is spoken in America. Setting up global services that are multi-lingual with native speakers would be easy here due to the availability of prospective staff members
Speed. Normally Americans go slow and want to be unavailable during lunch, but what if we devised ways to be lightening quick like Domino’s Pizza. Then we would have a niche. What if we had a web development system where websites could be designed, optimized, and marketed all in the time frame of 72 hours? If the system delivered quality work in that time frame, companies would pay through the nose for that type of service.
Sophistication. What if American companies thought of extra features and niceties to add to regular services to make them more attractive? We might be able to easily compete with overseas companies just because the services were so pleasant to use.
Partnering. What if American companies partnered with overseas companies (many larger ones already do) to take advantage of affordable labor and combine it with American Ingenuity?
Land. What if American companies figured out how to get staff members to be in a place with really inexpensive land and were able to establish low cost BPO services there — perhaps in a place like Tulsa or Memphis which are some of the lowest cost metros in the states. With such low land and labor costs, companies would easily be able to compete on an international level.
Technology. What if American companies got even better at using automization, robotics and other technologies, so we could compete with India. If were were twice as efficient as the Japanese, we could compete even with our high labor costs.
American salaries are high, and to keep these high salaries in a global market place we have to merit them. Money is a gift from god, but the gift is not just given without terms. You have to merit the money (or have really good karma), or god isn’t going to keep giving it.
On a final note, India is getting really expensive, and the general inefficiencies of the country prevent them from competing with America in the long run. As India gets more expensive, it will be easier for America to compete with them.