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Monday, February 09, 2004 |
 Stephen Roach (Chief Economist, Morgan Stanley): Following a paltry increase of hiring in January, America's private sector job count remains 8 million workers below the path of the typical recovery; there is a concomitant shortfall of nearly $400 billion in the real wage and salary component of personal income. In January, job losses were evident in a host of service sector categories that are prime candidates for offshoring - namely, accounting and bookkeeping, business support services, architects and engineers, legal services, and computer systems design.
12:23:08 PM 
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A great example of the type of business I am talking about (below) is the Framingham, MA company called Merchant Media. It is a $50 m a year business that sells "must have" products on TV (and other forms of direct marketing) both here and abroad. Products include Pasta Pro and Perfect Pancake. The company has only 5 full-time employees. Almost everything it does is outsourced or offshored (including the product ideas). It's international too: 100,000 of its Perfect Pancake makers were sold in Slovenia and Hungary alone.
12:19:00 PM
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Say I wanted to build a technology research company from scratch. I would hire all of the principal analysts and core management team (including IT) from US sources. All of the accounting, admin, international sales, research associates, call center sales, editorial support, translation services, report production, and IT services would be hired from offshore sources on the cheap. All I need is the talent at the top. How attract great people when the I can't afford to fund, out of operations or my initial seed money, health insurance and a retirement program for three years or more? I can't.
11:54:12 AM
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The real long-term solution to the American jobs crisis is to find a way to make it less risky for people to join a start-up. Right now, without basic health insurance or a basic livable retirement package, it is just too risky for talented and experienced individuals to join start-ups. The rewards aren't even close to the risks.
This is particularly true in export-oriented start-ups aiming at niche global markets (this is the growth area I am most excited about). It's possible, using outsourcing and offshoring to build a large virtual company for pennies on the dollar. However, the founding entrepreneur still needs a core team to help him/her get the start-up off the ground. Retaining the talent necessay to do this (this isn't burger flipping), is almost impossible. You can't do it by taking a second mortgage out on your house, you need to go to VCs (which are, as we all know, almost impossible to deal with unless there is a financial bubble in play).
If we can find a way to help these export-oriented businesses get off the ground in large numbers, everyone benefits.
11:46:27 AM
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Drezner: Offshoring journalists.
9:50:30 AM
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© Copyright 2004 John Robb.
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