corporations, and the workplace was dominated by industrial giants like General Motors. At the end of the century, the biggest employer in the United States was Manpower, a company that specializes in temporary and contingent workers.
In the manufacturing sector, one of the improvements that companies have made to make their process more efficient and economical is to employ a just-in-time approach to the inventory of parts that they carry. Instead of having large quantities of these parts sitting in inventory for long periods before they get used up, they access those parts from their suppliers at the time that they are needed in the manufacturing process and have thus eliminated the need for costly inventories.
The same type of thing is happening in the workplace as companies increasingly view the work to be done in terms of projects and think of their staffing needs in terms of what they need for current and upcoming projects. The idea of a temp, or temporary worker has been around for decades, but it tended to be restricted to clerical and office staff like receptionists and data entry clerks. Now companies hire temporary workers at all levels within the organization.
This is particularly true in the Information Technology or IT sector. That industry is very project oriented, and IT companies regularly hire people for projects with no expectation that their employment will become long-term. Even in Japan, the last bastion of the idea of lifetime employment, many companies where employees have traditionally expected to spend their entire careers with that company are now moving towards hiring temporary workers.
A January 3, 2008, article in The Economist titled “Sayonara, Salaryman” points out that almost 40 percent of the workforce in Japan are part-time, contingent, and contract workers and that this category is growing while permanent jobs are decreasing. It also points out that today’s young workers are not interested in accepting the corporate paternalism of their parents’ generation, where work was the center of their lives and even led in some cases to “karoshi” or “death by overwork.”
Outsourcing
“The unearned advantages of having been born as Canadians or Americans may be about to evaporate.” This interesting perspective from management expert Tom Peters — writing in Maclean’s (December 1, 2003) on the issue of outsourcing — applies to all western countries, not only Canada and the United States. What he is suggesting may evaporate are jobs that we have taken for granted for decades, along with a lifestyle and standard of living that have been the envy of many people living outside of western countries. Many thousands of these jobs, particularly in manufacturing and the IT sector, have already evaporated and moved overseas.
Dan Pink, in his excellent book A Whole New Mind, says that “outsourcing is overhyped in the short term. But it’s underhyped in the long term.” That opinion is supported by experts’ predictions of the number of jobs that will move overseas from western countries to countries like India and China in the next few years and beyond. So far, manufacturing and the IT sector have lost the most jobs, and those losses are expected to continue. But these job losses may be the canary in the coal mine. Most experts are predicting that the next wave of jobs moving overseas will be in the insurance, financial services, customer support, and engineering sectors.
It’s not just a question of jobs in western countries moving overseas. Foreign multinationals are aggressively going after markets in western countries, taking on the local multinationals on their own turf. A July 31, 2006, article in BusinessWeek cites the example of China’s Huawei Technologies Co., which won a huge contract with British Telecommunications PLC in a deal that “sent a chill through the rest of the telecom manufacturers.”
The same article states that over the next decade, the World Bank projects that developing nations’ share of world gross domestic product is expected to grow from one-fifth to one-third.
Ron Hira is considered one of the leading experts in this area and has written a book titled Outsourcing America: What’s Behind Our National Crisis and How We Can Reclaim American Jobs. In a July 3, 2005 interview published in The New York Times, he was asked in regard to outsourcing, “How can this trend be stopped?”
His answer was “There’s nothing that can be done to stop it. The question is, how do we adapt to it and deal with the negative effects?”
That answer should be a wake-up call to governments and business leaders in western countries.
Outsourcing is becoming more common among small businesses, including single operators. An August 20, 2010, report in Bloomberg BusinessWeek, titled “A Glut of Hiring Alternatives,” says, in part, “Between interns, temporary employees, freelance contractors, and overseas outsourcing shops, small businesses can get much of what they need done without hiring a single full-time employee.”
It mentioned a small, Long Beach, California business that used international contractors in Bolivia, India, Pakistan, and Germany for special projects. They found these through oDesk, a company that brokers work mostly between US companies and 700,000 contractors and freelancers around the world.
It gave another example of a single operator in Austin, Texas who hired an artist and a musician in the Philippines to create a 90-second video for $300 USD, one-tenth of what that would have cost in the US. It referred also to Solvate, a New York service that helps small and midsize companies to build on-demand teams.
Michigan governor Jennifer Granholm’s response to outsourcing is a plan to make her state the innovation capital of the United States. As the historical US hub of automobile manufacturing, Michigan has lost thousands of jobs to outsourcing in the past couple of decades. In July 2006, Google announced plans to open a Michigan operation that would generate 1,000 direct jobs and 1,200 indirect jobs over 5 years. Michigan offered Google tax breaks over the next 20 years as an incentive for creating these jobs.
When General Motors can get their cars built for $2 an hour in China versus $34 an hour in the United States, you don’t need a degree in economics to understand why they are now the biggest foreign car manufacturer in China. This is also an example of why manufacturing jobs, which have been a key part of the economies in western countries for decades, will continue to move overseas.
Dan Pink points out that the conventional view thirty years ago was that an economy couldn’t be based on services — manufacturing had to be the foundation. When asked how the United States can survive outsourcing, he suggested, “We massively underestimate human ingenuity and resilience.”
The future, he says, will bring “industries we can’t imagine and jobs which we lack the vocabulary to describe.”
Our future, in other words, lies in our imagination — to create products and services that the world doesn’t know are missing. Dan makes a valid point, but unless we pay more attention to the impact outsourcing is having on our workforce and find ways to deal with its negative effects, as Ron Hira suggests, we’re in danger of becoming nations of Wal-Mart and Starbucks employees.
A new relationship
An employee with a company in yesterday’s workplace could safely assume that included with the job were a variety of benefits and services that the employer would supply. Benefits ranged from dental plans to pension plans, and you could often expect an employer to assume the responsibility for such things as mapping out a career plan for you.
Even your employability and expectation of being with the company on a long-term basis was a given once you had gone through the hiring process and had landed a full-time job. Today, having a full-time job is no guarantee that your future with the company is assured. Your security is tied to
