The yardstick of success at most companies is the bottom line. It is a single number that is easy to compare from equinox to equinox.
Globalization accelerated rapidly with the development of digital technology. Low-cost communication and collaboration became possible over the last two decades. Digital infrastructure removed every previous barrier except for time-zone differences.
Without looking at any data from any company, one can conclude that outsourcing jobs improved the bottom line – the yardstick of interest. Otherwise, outsourcing would have been labeled as an experiment gone awry.
The main reason to improve the bottom line is to facilitate growth. Every conventional business course and book emphasizes growth. It is easy to forget that prosperity is opposed to growth. For an easy mental image, picture two families with equal income: one has two children and the other has four children. The prosperous family is the smaller one with a better quality of life for each member.
The acid test for outsourcing and prosperity is simple. Who would willingly outsource their own job, doing it for “the good of the company” or “the good of the community?”
Hopefully, I have established that jobs were outsourced for financial reasons only. The reason for this is often not put into clear terms because it makes us uncomfortable: a difference in human rights protections translates to a difference in the cost of labor between sovereign states. Exploitation is profitable.
As wealth has flowed into these once-lower-cost countries, a blanket statement can be made that the standard of living has gradually improved abroad. The cost of outsourcing has increased in lockstep, and the cost gap between onshore and offshore has closed a bit.
As a result of the lowered offshore profit, onshoring of jobs has become a thing. This has only happened in a few industries at this point. It is sometimes whitewashed as a PR campaign where “the company is onshoring for the good of the community.” Follow the money, not the rhetoric.
Not all jobs can come back. The labor supply chain developed organically over centuries. Once pieces were sent abroad, the supply chain was broken. In some cases, it is not possible to bring back a single link without the entire chain.
There is increasing social unrest, an increasing wealth gap, and a host of other societal problems that can be traced to the pursuit of growth over prosperity. This is due to a company trying to improve their bottom line while neglecting the prosperity of the community.
On paper, onshoring looks good. But there is a new problem on the horizon created by technology.
Some of the outsourced jobs were blue-collar and some were white-collar. Some individuals may now be underemployed. Underemployed workers are out-of-place, unhappy, and underpaid.
Technology is responsible for the latest casualty to job markets: the crowdsourcing of skills. This is the epitome of underemployment. Companies like Fiverr pit people against each other for the lowest possible price for a particular service.
I call this “domestic outsourcing” since it does nothing to help a community prosper. Local professionals are pitted against hobbyists.
An open democratization of skills is supposed to give me, a startup co-founder, a very good deal on services I need. I refuse to use these types of services. They fuel underemployment on the basis that I can settle for “good enough” while ignoring the invisible burden to my community.
A search algorithm – with filters of “Best Selling” or “Most Popular” – will now determine who gets paid and who does not. Upcoming professionals will disappear in a sea of good enough with the possibility of needing to take lower wages on the job.
Jobs that go to the lowest bidder are fuel for the fire that is income inequality.
Nobody wins in a race to the bottom. Companies focused on ruthlessly growing and improving the bottom line are never going to prosper. We can see this when one chooses to layoff workers instead of reduce executive salaries.
A focus on hiring local experts, paying livable wages, supporting local needs, and responsibly paying taxes bring about a healthy community. This is Shift Sight.
Shift Sight will utilize local labor and local manufacturing. The labor supply chain has not evaporated for Jade, and the company holds a belief that Made in the USA is not optional. This is not a call for America first – it is a call for community first.
Natural ecosystems only function well when all constituents can prosper. You will not encounter a forest where all of the “mushrooms are outsourced” in an effort to make a singular tree grow extraordinarily tall. A community is a human ecosystem.
Technology has given companies the option to outsource labor internationally and nationally. Neither of these options builds the communities that we live in and participate in.
Shift Sight has an ESG Policy that leads to prosperity for all involved.
Ty is a Founder of Shift Sight, LLC.