You don't take anyone from anywhere drop them in front of a master tradesman for 12 weeks and have a master tradesman pop out in a few days. The output there is a guy who can probably run the machine and have a limited ability to consistently churn out stuff without understanding the process fully. That's not a reflection of pay, race or talent.
That's usually a big part of the design of the outsourcing arrangement. You train for minimum viable capability. You then just fine the suppliers and eventually you'll get what you need, even if they waste half of the work produced. I've done these with domestic and foreign contractors. It's always the same story. The difference here is that the quality required for tools is higher than end products, and the supplier cannot make money without the high skilled people.
But then ten years later the workers you trained have now formed their own company and they are the ones making the huge profits, and there's nothing you can do because your country doesn't even have any skills in the field anymore. Now spread this across tens and hundreds of industries.
Sure, we still have software development and other super high tech stuff, but China is figuring much of this out very quickly as well.
I think we'll find out soon enough which country had the better strategy.
The defining quote of this idea came from the Morris Chang, CEO of TSMC:
"You Americans measure profitability by a ratio. There’s a problem with that. No banks accept deposits denominated in ratios. The way we measure profitability is in ‘tons of money’. You use the return on assets ratio if cash is scarce. But if there is actually a lot of cash, then that is causing you to economize on something that is abundant."
Source: https://www.forbes.com/sites/stevedenning/2011/11/18/clayton...
Ratio-based investment isn't fundamentally short or long term, and the article doesn't persuasively make that argument. The entire point of selling off your assets to improve profit-to-asset ratios is to improve the performance of your assets, so that they can be put in investments which offer better profits. Whether the new investments are short-term investments or long-term investments is a matter of investor preference, not financial science.
In fact, the argument to be made is that companies which "sell off" their human capital are actually in violation of RONA principles, because the company is not ultimately made of dollars and cents but of people and products, and since the company can't really extract more value out of its highly specialized human capital (I.e. by reassigning it to more productive work), it should not reassign that capital elsewhere.
Investment bankers and programmers tend to make the same error: you are less competitive at manipulating your abstraction (whether that be money or high-level languages) if you do not understand how it abstracts away reality. Otherwise, you will constantly be dealing with leaky abstractions.
The management people give no shits about the organization as an entity. Their short term outlook is driven by the dumb KPIs that stand in front of their excessive (vs. base) incentive compensation.
tl;dr Don't rush to blame the workers, they're usually just doing what they've been told to do.
The majority of the time, that's the only reason why they're relocating the work. If you have to pay foreign workers equivalent to Americans to get equivalent work, then offshoring is pointless.
Not really Google and MS provide their Indian employees working in India above average market rates which are still lower than what the average American gets.
Some other US based companies directly or indirectly pay their Indian employees average or below average Indian IT salary so the best and brightest dont go there.
In many ways the difference is that headquarters is next or on top of the factory instead of in a different state.
Sorry I have to question this .. Bosch, Mercedes, BMW? There are a few notables such as Krupps that were once upon a time family owned but increasingly these companies are owned by global conglomerates.
Yes, these companies do outsource many functions to poorer countries but their centre of gravity is very certainly in Germany.
I play harmonica, and German made Hohner's are considered to be the best. The only quality competitor is Seydel(Again a German company), or Suzuki(Japanese). I think its the overall culture and seasoning to quality and workmanship your ordinary citizens are used to.
The real deal isn't just High end manufacturing.
I know of a relative of mine who used to buy Grundig and Braun radio/taperecorders/stereos in the 80's. The design and quality still comes across way ahead of its times.
Quality shows in everything you build.
Volumes may be profitable for a while. But with lack of quality you won't be able to build BMW's and Airbus's. The kind of manufacturing that has a future.
The issue has nothing to do with ethnicity per se, and everything to do with management dreams of hordes of top-notch foreign talent just dying to do high quality work for pennies on the dollar, which in my experience simply doesn't exist.
My [relative] is [in a tech role] for [large insurer]). They recently laid off all of their in-house tech staff save for her, in favor of outsourcing, and are leaving him to train and guide the entirety of the new staff. Meanwhile, they did absolutely nothing to keep his morale/loyalty, nor to ensure he was incentivized to do this task well. So, unsurprisingly, he's counting the days to retirement and letting the clusterf*s mount.
I'm sure there was a way to handle this that wasn't ludicrously inept; the result, however, will be laid at the feet of the foreign workers that have little training and no access to the now-lost institutional knowledge.