OUTSOURCING JOBS - CHEAP LABOUR DESTROYING JOBS

THE OUTSOURCING MYOPIA - A STRATEGIC CHANGE IN MINDSET IS NEEDED

In the 1960s Professor Theodore Levitt of the Harvard Business School wrote a best seller book which he called Marketing Myopia.
Today in 2016 I have called this article The Outsourcing Myopia because I believe that so many Global Companies are short sighted in their Strategy to outsource operational functions to lower costs but they fail to take into consideration the Social Costs of their decisions to outsource to India and the Philipinnes to give just two current examples.
From the Consumer point of view this has been a disastrous Policy and there has been so much criticism of these overseas outsourced companies that there is almost a stampede to relocate functions back in their home countries.
In Australia Richard Branson has build a strong company with his Virgin Australia. I have the greatest respect for Richard Branson who has done so much to create employment in so many Industries. However, with a shortage of jobs in Australia - particularly in Melbourne and Brisbane, his company Virgin Australia are still trying to lower costs by outsourcing functions. He is not alone in this drive to outsource and lose jobs in the country of operation.
The result of this policy is a high Social Cost which in my opinion outway the cost saving benefits of outsourcing to India.
For example, an Indian work person will not pay any taxes to help the Australian Economy. He or She will not buy food products in Australia, pay for a House, pay for consumer Durables in Australia.
The Australian work person loses income, costs the Australian Government in unemployment benefits and places enormous financial burdens on the Australian family. How can this be fair?
The truth is that the Virgin Management and like International Companies are too short sighted to care about Social Costs of outsourcing functions to India and elsewhere.
In my view, Management should build on the skills of the local worker. They should stop outsourcing to India and other low wages economies.
Globalisation has been a failure from the point of view of the advanced economy workers.
Top Management should factor in the Social Cost before taking decisions that cause unemployment and misery to the indigenous employees.
The Policy of Increasing Shareholder Value - preached by most Business Schools - should not be the main Strategic Objective of Top Management. Increasing Worker Value and Employment in the country of Operation should be given equal status in Corporate Policy.
So. Richard Branson and Virgin Australia and all you other Companies that think that outsourcing to India is a good thing, stop, change your Strategy and invest in the country that is giving you revenue and profit. So, put  Social success first and build your workforce in the country of operation. Virgin Australia is Australian not Indian or Philipinnes.

Ray Williams MA MPhil MBA DIPM