Outsourcing Is Evil

Outsourcing is an essential part of conducting global business in a global economy.

Whenever I tell people that I outsource production of all my products for Sand Shack to Asia I always feel like I have to defend my actions.

After all, outsourcing is evil.

So why is outsourcing evil and what should we do to make it right?

First, let’s look at the word ‘outsource’ itself.  The word ‘outsource’ is made of two words; ‘out’ and ‘source’.  What comes to your mind when you think of ‘out’?

For me, the following come to mind:
Out of a job
Put the dog out
Outsider
Get out!

My conclusion?

‘Out’ is a negative word.

The word ‘out’ conjures feelings of exclusion and separation. When people think of the word out, negative phrases and feelings, like the ones I listed above, come to mind.  So, when people hear the word ‘outsource’, negative feelings towards the process arise.

Another reason outsourcing is evil is because our politicians and media have made it evil.

Without openly affiliating myself with any particular party let me ask you to think how many times Obama and McCain have talked about outsourcing and the debates they have had over it.  This has left the American people to form the inevitable conclusion that outsourcing is a highly controversial subject, and therefore somewhat evil.

So is outsourcing really evil or is it just the word itself that is evil?

Outsourcing is an important part of doing business and staying competitive in a global economy.  Furthermore, businesses don’t just outsource to get something for a cheaper price; they outsource to receive a higher value product or service for their money.  They also outsource to acquire things they cannot get in their home country.  Without the ability or means to outsource, business would be severely hindered.

So how do we remove the negativity associated around outsourcing? I found my answer this weekend when talking to my father, who is the Chief Procurement Officer for LG Electronics and directly controls $60 Billion in buying power for the company.  LG is a South Korean company, and like the United States, South Korea is a first world country that usually outsources the production of products to cheaper Asian nations.  He said that they don’t use the word outsource at LG.  At LG they prefer to use ‘external manufacturing’ as opposed to ‘outsource’.  And my personal favorite is a phrase my father claims he coined and is trying to get more people to use at LG (however, he also claims he coined the word ‘bling bling’, so this most recent claim may be debated).  This phrase is as follows.

High Value Sourcing

High Value Sourcing is a much more accurate and friendly way to describe the process of manufacturing products or acquiring services overseas.  Companies don’t outsource simply to get cheap products, they outsource for high value products.  For instance, AT&T outsources their call centers to the Philippines.  Do you know why? For starters, call centers in the United States are expensive to operate and the quality of people that work there is low. The reason for this is that working at a call center in the United States is considered a dead end job, and therefore the turnover is very high.  Call centers in the Philippines employ enthusiastic, college educated men and women who not only are less expensive to employ, but also stay with the company longer.  A call center in the Philippines offers a company a much higher value than any call center in the United States could ever offer.  This is High Value Sourcing.

Finally, on a personal note, I source my products in Asia for a few reasons.
1. Better Quality Products
2. Better and Faster Service
3. Less Expensive Products

When I look at the above three reasons I would be dumb not to outsource my products overseas.  This is truly High Value Sourcing.

So in conclusion, yes, the word ‘outsource’ is evil but the process is essential.

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