47 Comments Add your own

• 1. Andrea Muntzel  |  December 17th, 2008 at 10:14 pm

  This was a really interesting idea I never knew about. I decided to look around on these websites a little bit to see what the rates are for different things. A lot of the companies and individuals aren’t that cheap. I wonder if that’s because wages have changed since 2007 or if I just didn’t look enough to find the less expensive offers. I am actually thinking about posting the translation of my business card onto the site Guru for free bids just to see how much it would cost me and if I would get any offers. It seems like a low-risk way to test whether these sites really work. It’s hard to trust any online source when scams are so prevalent, especially ones that specialize in bringing together people from other countries where laws and enforcement are questionable.

  I don’t really see the ethical implications of outsourcing small jobs to other countries. I think the problems with big companies doing it is that they can afford to keep the jobs within the United States but choose not to—not to keep prices low, but to make profit margins even higher. It seems like if you couldn’t afford to pay somebody within the United States to do a job, it would be better to send it abroad than to not have it done at all. A lot of small companies wouldn’t exist if they couldn’t find somebody who would do the job for the amount they could afford. If there are ethical problems I’m missing, maybe somebody else can shed some light on them.

• 2. Chris Carr  |  December 18th, 2008 at 12:26 pm

  Andrea,

  Question:

  Why do you think big companies can afford to keep jobs in the US? Data/studies to support?

  Your conjecture may be right, but if so I would be surprised and would think it is industry and/or firm specific.

  For example, US labor costs and the unions behind them, are clearly killing the Big 3 auto firms from being competitive.

  My main point: big does not always equate to profitable.

• 3. Andrea Muntzel  |  December 18th, 2008 at 11:39 pm

  That’s a good question. I’ll be honest in that I didn’t necessarily research my statement to gather hard evidence before making it. I was just making a generalization that I think the line of ethics is blurred when a US-based company takes jobs out of the US to lower manufacturing costs and then doesn’t send the cost savings towards the consumer. I understand that a company’s purpose is to make money for its shareholders but my own personal ethics tell me that there are other factors that should be considered in making business decisions (Ford Pinto debacle?).

  I guess an example of the type of company I was thinking about when writing this was Nike. This is probably because I’ve been Christmas shopping lately and a pair of Nike yoga pants costs about $50. Nike is also one of the ‘poster children’ for Asian outsourcing. Each of the factories that produce Nike products are owned by subcontractors. I guarantee the manufacturing costs of yoga pants aren’t close to $50, especially since the gross profits of Nike FY 2007 were $8,387,400,000. I think they could move some manufacturing to the US and still make plenty of money. If they would prefer not to, then at least lower their prices a little bit!

  There are plenty of companies that are in similar circumstances to Nike. I got this list from CNN.com

  http://www.cnn.com/CNN/Programs/lou.dobbs.tonight/popups/exporting.america/content.html

  There are a lot of names on that list that are making exorbitant profits—potentially at the expense of the American workforce.

  Last to be discussed are the Big 3. The Big 3 already do outsource jobs internationally. There’s a lot of controversy over whether we should really bail them out because of that. According to an article in the International Herald Tribune, “GM, Ford, and Chrysler have around a dozen factories in Mexico.” GM also supposedly has factories in Russia, India, China and Brazil. Whether this is because the US labor costs have already gotten to them, I don’t know.

  http://americaneconomicalert.org/news_item.asp?NID=3525886

  Regardless, the automakers were profitable at one time. It takes profits for a small company to become a big company. The poor economy coupled with the difficulty of getting credit with good interest rates is a lot of the reason why the Big 3 are failing now. Also, the fat salaries of the CEOs are another reason why the auto makers could be losing money. Check out Robert Nardelli’s severance package from Home Depot…I’m sure he gave Chrysler a good deal though. Yeah, right.

  Outsourcing is complicated. Some may argue that it’s the way business is done in the 21st century. Call me old fashioned or patriotic, but I don’t think outsourcing of jobs should be done without good reason or positive effects.

  In sum, I don’t think all big companies can afford to keep jobs in the US. I do think some of them can, however, but choose not to just to fatten their own pockets. That’s where there is an ethical problem.

  Hope that clarifies my opinion, Professor Carr. Thanks for making me think!

• 4. Chris Carr  |  December 19th, 2008 at 1:45 pm

  A good, thoughtful analysis. Well done. Thanks for taking the time to research and check back in.

  Let’s run with this and please allow me probe a bit more …

  How would you define your term of exorbitant profits?

  5, 10, 30, 50, 100, 200 percent?

  Sliding scale among industries and firm size?

  Should a firm be allowed to raise the percentage one year, in anticipation that the next year or two or three will be low or no profits and they seek to build up their reserves?

  Who decides?

  Should the government regulate and if so how can it do so in a way that passes constitutional muster?

  I went to dinner last night with a good friend. The restaurant I ate at had at least a 60 percent mark up on the wine I ordered. Exorbitant or fair game?

  If we are talking about a firm you or your family own, what would you say is a fair profit to make?

  Etc.

  Just some things to think about that can make addressing this issue problematic and complex from a practical standpoint.

  The business haters of the world, and there are a fair number of them out there, will sit on the sidelines and shoot their slingshots at you with your MBA and argue you are a bad person for making “exorbitant profits”. Yet, not one of them can define what that means, post reasonable solutions to the above questions, or provide an alternative model that will work better than the one we have. In your career you need to be ready for them. Do not hesitate to ask them the types of questions I pose above. Remind them of all the firms and business people that act ethically day-in and day-out but never make the paper or news. Then watch them kick the dirt with their feet, with head bowed as they stop looking you in the eye, and as you wait for a decent answer from them.

• 5. Morgan O'Hara  |  December 20th, 2008 at 11:52 am

  Speaking with one of our professors here at Cal Poly, he recommended I read “The Four Hour Workweek.” It’s basically an extreme time management manual. One of the book’s recommendations is to outsource as much as possible. Get virtual assistants in India to do your busy work, contract specialists in China to get research done, and so on.

  I think outsourcing for the little guy should not be dismissed. When there are things that someone else can do better than you – like writing software, improving a website, even market research – then it makes perfect sense. It’s cheaper than hiring the consulting firm next door.

  If you have an overabundance of work, you might want to focus on the important things and outsource some of the more time consuming stuff. If you don’t have the luxury of a personal assistant, outsourcing can be very cost-effective. How often do we have plans to look into something, but we get overwhelmed with all the other things going on? Now there’s one less excuse - there’s someone out there somewhere who can lend a hand. And I’m snickering while I’m writing this, because it sounds and feels mischievous. But if the personal outsourcing market is expected to grow to over $ 2 billion, it would be foolish to write it off. At the very least, I would recommend experimenting with outsourcing, just to get a feel for it.

  And I confess, I recently got my resume and a cover letter translated into Spanish by a professional in Lima, Peru. Just to try. I’m very happy with the result, and I plan to continue to experiment.

  This feels globalization on an individual scale. The key to make it work is to find good people. That takes diligence and patience. In due time, you may well be able to assemble an effective team, depending on your needs. In a sense, you’re a virtual manager with an international team of outsourcers to draw upon when needed.

  As for the ethics of it all, that’s a tough question. You certainly shouldn’t blatantly push someone else’s work as your own. But I think in many instances it is fine to complement your work – or better manage your life – with the help of outsourcers. A general rule of thumb is that you better be able to openly admit to having outsourced. But there’s more to it than that. When would outsourcing be unethical?

  To add a little fodder to the exorbitant price issue - we learned in economics about optimal pricing. From an economist’s viewpoint, fairness is not in the equation. I think the probity of a company lies less in its profit margins, and more in how it conducts itself, invests its money, uses its influence, treats employees, impacts society, etc. I don’t agree with maximizing profits at the expense of all else.

• 6. Jenna Healy  |  January 17th, 2009 at 3:13 pm

  Interesting post. Respectfully, I disagree with most of the previous posts about outsourcing, at least right now. Our economy is struggling to say the least! Couldn’t we attribute some of this to the fact that we’re outsourcing everything from manufacturing to customer service to surrogate mothers? We are stimulating other economies… which I don’t necessarily think is a bad thing, but how do we stimulate our own if we’re outsourcing so much? A job done overseas is one less for an American.

  Also, the prices right now for outsourcing are cheap, relatively. Is this only a matter of time until the prices become the same in the states? Will other prices increase or will ours decrease? Outsourcing is changing the way the world does business. I think ultimately that’s a good thing, but how do we lick our wounds and not escalate the issues at hand?

  Am I missing something here or do I just disagree?

• 7. Raquel Rusing  |  February 4th, 2009 at 7:10 pm

  My negative view on outsourcing is similar to what’s already been stated. Keep the jobs on American soil. Build our economy. Is it really ethical to underpay someone to get something you could afford for more? So, I’d like to leave outsourcing and look at offshoring since the MIS class incorporated both into the same lecture. For those that don’t know, there is a small difference between the two. Outsourcing involves contracting with a supplier while offshoring involves an organizational function being transfered to another country. An example would be a U.S. firm buying magnets for its electronic device from a supplier in China vs. a U.S. firm stationing a new branch of electronic production in China.

  I found some interesting articles about it. One from Money.CNN.com called Made (again in America) and one in Industry Weekly last August that an IT friend of mine pointed out, Welcome Back U.S. Manfacturing. Both articles talk about the rising cost of labor, rise in transportation costs, which makes shipping abroad too expensive, and propose the benefits of near-shoring, i.e. Mexico. The first one, however, is specifically targeted to Chinese outsourced goods and offshoring. It states that, “the cost of shipping outsourced goods from China to U.S. customers has doubled in just two years thanks to high oil prices and labor costs in China are rising sharply [because] there’s a shortage of technical and managerial talent.”

  Ultimately, I think that bringing back this sort of business to the U.S. can stimulate the economic crisis in a positive way for our country.

• 8. Amy Cook  |  February 15th, 2009 at 12:26 pm

  I checked out Elance and Get Friday. The two sites are a little different. Get Friday sets you up on a monthly plan and then basically acts as your personal assistant, which is pretty cool. Elance had legal services as low as $15 an hour. In my last position, we had a lawyer who would read our contracts and advise us on copyright and regulatory issues with our packaging. I believe his rate was $100 an hour; I am definitely going to email this site to my former boss.

  We hear a lot of negativity surrounding outsourcing because it “takes away” American jobs. However, it is not the responsibility of businesses to fix the unemployment problems in our country. I flipped through our econ book from last quarter and found that I had highlighted this quote: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profit so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”. You can’t blame businesses for outsourcing if it is a good financial move for them. This blog also reminds me of the one we did called, “Out of India”. There was a link to a review of a book called, “Globalization: The Irrational Fear that Someone in China will take Your Job”. The basic gist is that the hysteria surrounding globalization is unfounded and that far more manufacturing jobs have been lost in recent history to technology rather than outsourcing.

  I think it’s cool that technology has given us the ability to have a company logo designed by someone in India for $10 an hour and to request those services simply by visiting one of the above mentioned websites. I do think it is important to consider what kind of intellectual property you are sharing with those who work with your company in foreign countries. They may not be restricted by patents or copyright laws and it’s important to consider the possibility of creating a competitor.

• 9. Michael Mossman  |  February 22nd, 2009 at 11:31 pm

  I have used websites similar to the ones listed above, particularly one called alibaba.com. About eighteen months ago I had an idea for a product that already existed but I wanted to put my own features on it. I looked around in the United States and found some supplier who were priced way to high. I turned to alibaba.com and started searching though the thousands of manufacturers and distributors who are on the Alibaba network. I found the Alibaba site to be very helpful and full of qualified manufactures that appeared to make great products. I was able to chat directly to company representatives who answered my questions right away and were able to give me quotes. In the end I did not go through with my plan, but it was a great little experience and the first time I ever attempted any form of international business.

• 10. Dan N  |  December 26th, 2010 at 6:51 pm

  I did some consulting work for a local start-up over the summer that was utilizing Indian CAD operators to generate 3D models of two-dimensional building plans. We paid $100 for the service and turned around and charged our clients $1,500. At my previous job we were paying two full-time operators $50k and $65k annual salaries - plus employment expenses - to do the same job. While the quality and quantity of work was comparable, motivating the outsourced operators was a breeze compared to motivating our in-house employees. They are so thankful for the work that they will break their back to satisfy their customers.

  Big companies with big budgets have obviously been building robust outsourcing models for some time. It amazes me that smaller businesses - often concentrated in specific industries - are still dragging their feet with regards to outsourcing. It is true that this practice is risky and requires new managerial skills, careful planning and detailed DD. But the costs of avoiding the risk and allowing others to work out the kinks of their outsourcing model will spell doom for many small- to mid-size companies in the coming years.

  I’m thinking specifically of the construction industry because I have some experience there. Contractors are beginning to utilize knowledge workers overseas to do the menial tasks during the planning phase that result in long-term competitive advantages.

  By the way, this blog - and the linked Silk Road International Blog - are the most insightful that I’ve seen to date concerning my sister’s fledgling apron business. I’m passing it along to her momentarily.

• 11. Cassie Bettencourt  |  January 7th, 2011 at 5:50 pm

  I think outsourcing for the little guys is a very interesting concept. Whenever I envision outsourcing, I always think of the big companies mass producing their product in Chinese factories or I think of call centers based in India. Before reading this post, I would have never connected the idea that you can hire people from around the word over the internet with the idea of outsourcing…but it makes sense that it is.

  I am a fairly risk-averse person so this idea made me a little anxious. I don’t necessarily see anything ethically wrong with using these sources since these people are posting their own prices and the economy/business is more global than ever. That being said, I still don’t know if the savings would be worth the risk. The possibility of leaking a competitive advantage and the higher risk of fraud is frightening. Why would you want to add more risk to a probably already pretty risky business venture? But then again, why do you leave your house in the morning and drive your car? Each of those things increases the risk in your life as well. I liked what the Silk Road International Blog said about having to trust people at some point. That is true in business and it is true in life. I also thought the comments on doing your due diligence and your homework about the suppliers were dead on. If you’re going to use these services, you would be a fool not to. It’s the only way I would use them.

• 12. Katie Moeller  |  January 8th, 2011 at 11:11 am

  I did not know there were opportunities for small businesses to utilize outsourcing. While this may be beneficial for some, I would struggle with trusting them. I would assume that if I started a business, it would be because I see an opportunity to introduce a new product or idea. If I started to outsource some of the production or legality behind it, I would risk being copied. As a smaller business, I would be willing to take on more loans than utilizing someone else’s services. I believe it is ethical to use these services. In some ways, it’s just being smart by trying to save money.

  As the article mentioned, you should visit the company/person who is doing your outsourcing to ensure it is being done right. It seems that the travel expenses would start to add up and cost as much as your cost savings. Even though there are customer ratings and reviews, these cannot always be trusted. I would lean towards using recommendations and referrals if I were to outsource.

  When I worked at Best Buy, we started to utilize outsourcing for some of our home appliance products. One example was a new microwave from a new vendor in China. Our goal behind this outsourcing was to bring in an opening price point microwave into our stores. What a huge flop. We had so many issues with getting this microwave into our stores. There were issues in regards to the microwave passing UL standards and with it leaving China’s port. Once we finally did receive the product, the sales were minimal. My lesson learned from this example is that we tried to outsource and realize cost savings but in the end it caused much more hassle and stress than what it was worth. I am sure there are people and businesses who have much better outcomes when outsourcing.

• 13. David Hart  |  January 8th, 2011 at 2:01 pm

  From first glance, it appears that these services would be very beneficial. Of course I would want to make sure I did my homework very carefully before fully relying on someone overseas I only know via the internet. I appreciated reading the “Buying from Suppliers Online” article–it sounds like some good advice.

  I agree with one of the above posters that it is important ethically to take credit for only your own work. Give credit where credit is due. Outsourcing can certainly help a company. The ethical implications must be considered on a case-by-case basis.

  I would use these services only after researching them carefully to ensure that I was not being taken advantage of. This would be a challenge, so I would try to err on the side of caution. However, it appears there are some great opportunities out there!

• 14. Robbin Forsyth  |  January 8th, 2011 at 3:46 pm

  I believe outsourcing is a great strategy to help any size business stay lean and utilize specific expertise as needed for appropriate situations.
  In my previous working life I was happy to make use of the technical expertise available in Asia at or near the factories I worked with in order to get prototypes and samples made. The turn time was much faster and the work flow made more sense. Sending components and other pieces around the globe and involving more people than absolutely required only creates confusion. If utilized correctly the difference in time zones can keep work on time critical project going 24 hours a day to accelerate completion.
  The fact that more knowledge work is being done is not surprising but brings up some issues that are not monetary in nature.
  It would only seem to make sense that anyone looking for legal expertise should probably work with a lawyer within the country they are working.
  Visual deliverables such as graphic design usually carry cultural aspects from the creators up bringing. If a western company is seeking design work that is appropriate for their home markets cultural considerations should be reviewed and discussed before any work is started.
  The single biggest challenge when working with outside sources for any project is communication. Can you explain and document EXACTLY what you want to be delivered? Lots of time and money can be wasted because the customer does not communicate what their needs are before a project is started.
  All of the information laid out in “Buying From Suppliers Online“ is accurate. If a company does not have enough experience, infrastructure, (or the ability to acquire these) I would recommend working through a sourcing agent until understand these dynamics better. Paying an agent 6-10% commission could help minimize a lot of problems and increase the flexibility of your supply chain.

• 15. Chris Bruns  |  January 9th, 2011 at 5:51 pm

  I really like this article because it is valid and brings to light all of the possibilities when searching for business professionals. There are so many well educated people that are a perfect match for small ventures and entrepreneurs, and now there are sites like the ones listed to help match employers and employees. It is a concern to me that outsourcing some of these technical jobs will continue the trend of sending more money out of the states. However, I believe that if it enables a business to work and thrive in the US and in turn creates wealth, then the outsourcing is well worth it.

  I believe that I would use these services and outsource to another country for work. I would like to one day open a company that doesn’t have a physical location, and is service based, operating primarily on the web. Resources like these make starting a shoestring venture like the one I have planned possible. I believe that the savings are worth the risk and that it will be more and more commonplace to see business done like this. I believe that it is ethical to use opportunities and resources like this because it is a win-win scenario. Entrepreneurs are able to begin business on modest means, and are able to employ professionals that are skilled and are happy to have the work. A great book that is in the same vein and speaks to the concept of ventures on a small scale is Shoestring Venture: The Startup Bible.

• 16. Jessie Wilkie  |  January 9th, 2011 at 8:13 pm

  I HATE THIS. I oppose these services. It’s just this type of mentality–the whole getting ahead at any cost that has gotten America into the mess that it is in today. Fareed Zakaria wrote a piece in Time Magazine called “How to Restore the American Dream”, which is reminiscent of the numbers apparent in this blog post. Because if you do the math there is no way for American professionals (lawyers, computer programmers, etc.) to compete with those wages and still have a satisfactory standard of living in America. So as the $250m/yr grows to over a billion, I believe it’s going to symbolize tougher times on America. Not easier ones. I’m not saying that we should take on isolationist policies right now, it’s too late for that.

  But I am saying that I believe it is unethical to outsource like this. Funny that I say that, sounds rather nationalistic of me…how hypocritical. I honestly think that outsourcing more is only going to hurt the American economy more in the long run–the majority of people will suffer although some will be made better off. This reminds me of an ethical theory that is slipping my mind right now, and this form of outsourcing would go against it. Because if any one person is made worse off (in this theory) then it is an unethical move.

• 17. Brady Haug  |  January 17th, 2011 at 11:07 pm

  The idea of outsourcing for small scale businesses is not an option I had considered. I have never heard of these types of websites, such as Guru, that set up outsourcing operations for the standard Joe. I think these websites are a great idea for certain circumstances. With the proper precautions in divulging information, these types of websites could be a great tool for a startup company to fulfill non regular tasks. If a startup needed a cheap effective employee for a short project, like getting their website running, this would serve as a great meeting place. I think that there is a massive risk involved with pushing technical tasks overseas. In my undergraduate studies, I have listened to entire lectures about the dangers in false IP protection in outsourcing. Personally, the risk of outsourcing any job that requires specialized information to be divulged is way too risky. Ideas are too easily ripped off in US outsourced ventures. Just as we saw in the “Brits Get Rich” video, the inventor was worried about his energy regulator falling into the wrong hands.

  In outsourcing operations, it seems as though there is a massive grey area in regards to ethics. The advantages of outsourcing, in place of localizing jobs, are too lucrative for companies to pass up. The ethics involved with outsourcing are stereotypically red flagged as child labor issues and poor working conditions. Does the cheap labor outweigh the moral implications of outsourcing? I find it is ethical for a company such as Dell to employ low paid technicians in India to respond to US customer support issues. Though I it may aggravate customers to deal with foreigners for technical issues, it is a cost effective and ethical operation. It is the manufacturing operations that pose the biggest ethical issues. Companies need to not be blinded by financial benefits of outsourcing and really gauge whether the decision is ethically correct. I worked for a US based medical device company where all the manufacturing was done in house. The company prides itself on this issue. I think these websites are a great idea, but I think it is too risky companies and better for our economy in bringing back more manufacturing jobs.

• 18. Amanda Podesta  |  January 18th, 2011 at 11:43 am

  I thought the final point from the Silk Road’s post was very good. You definitely can’t take for granted what can or cannot be imported/exported. In particular, I know Italy does not allow anything that has a manufacturing presence on the mainland into the country. My family found this out when we tried to ship in custom silk flowers for a family member’s memorial wreath.

  … anything tagged “exorbitant” in terms of profit is subjective as long as the business’ practices have been legal and ethical. The only way I can see a discussion of “exorbitant” profits to be applicable is in regards to price gouging (when prices are sharply raised in the case of emergency or deals are reneged to capture a profit on an unanticipated price change).

  It’s not like Nike stole its profits. Employees worked hard to source, set up supply chains, customers, and gain contracts. Nike is not answerable to America; only to its employees and shareholders. It’s a company, not a charity.

• 19. Jessica Shayler  |  January 19th, 2011 at 2:52 pm

  I am with Cassie in that I am fairly risk averse. If I were a small business, I would probably be more likely to “in-source” (hire local immigrants) than to outsource, depending on the business venture. I also agree with some of the above commenters who talk about outsourcing for the little guy as just another aspect of the growing global economy. It’s an opportunity open to everyone, so it seems it would be part of your due diligence to research all options and decide which ones suit your needs. So in that respect, I do not feel outsourcing in unethical. I feel America’s debt and all the decisions leading up to our current financial crisis are more to blame for the lack of jobs than is outsourcing.

  On another note, one of last year’s posters asked, “Is it really ethical to underpay someone to get something you could afford for more?” To that I would ask are you willing to pay more for a product than your neighbor because you can afford a higher price? I feel there might be a loose link to price discrimination schemes. We’ve all heard about Amazon getting in trouble for listing different prices to different people. People get upset because they don’t want to overpay. Well that’s why companies outsource…

• 20. Randy Camat  |  January 21st, 2011 at 10:23 pm

  I definitely would be very hesitant in using online outsourcing services, even though I would have an opportunity to save. The risks are certainly going to be high. I too am risk averse, so although the payoff would be very good, the unknown risks that come with outsourcing to another country would differ me from making the decision. I believe the only way I would use outsourcing as an option to save is if I absolutely 100% trust the person on the other side. That narrows down the field to my immediate family and none of them are in this business.

  Although a business could save tons of money outsourcing to another country, that money would not stay in the country – in our case, the United States – and we need as much money to stay within the country to help stimulate the economy. In addition, I believe that outsourcing for cheaper prices degrade the value of the product or service. How can someone with expertise in electrical engineering compete with someone else with more capabilities (electrical, industrial, and mechanical engineering) but at a cheaper rate - $25/hr? It would not be fair to both the individual to work at a lower rate than what they should be getting.

• 21. j hurley  |  January 25th, 2011 at 3:38 pm

  Outsourcing can be an great way to reduce operating cost or get a hold of capabilities that you would not have otherwise. I think that it is very important to emphasis the part of the essay that notes that one should be careful to what information they give away. Many small companies that start up are doing so because they have some sort of intellectual property, and they should do what they can to keep it safe. When you outsource things that have I.P. you are really just giving them away as there are very few laws to stop stealing and imitation in other parts of the world.

• 22. Will Moeller  |  February 1st, 2011 at 1:55 pm

  Want to be a skilled laborer for hire? All you have to do is post online. This is a really interesting idea.

  It seems that this online sale of outsourced services is actually getting legs. Furthermore, on this discussion board it has been compared to hiring a consultant. That wasn’t exactly what I compared it to at first, but I do like the idea. Having been in the consulting field for several years, I’ve seen how lucrative it can be…if you’re the firm owner. The outsourcing service provider does have some notable advantages over an established consulting firm.

  First, price is an obvious benefit. If I need a lawyer, the Indian lawyer billing at $20 per hour looks like a great deal compared to the New York law firm charging 100 times that. Another benefit would be the outsourcer’s eagerness to do a reputable job. Similar to a new firm wanting to gain a sound reputation, an outsourcer would is probably more likely to accomodate its client - you. Finally, an independent outsourcer is more likely to give you what an established consulting firm won’t - a true opinion. Large consulting institutions have incentive to play to politics and expectations. Taking an extreme stance or opinion stands to give the firm some credence if correct, but the large consulting firm has more to lose. The independent outsourcer simply has more flexibility to tell you what he/she really thinks.

  The obvious downside to outsourcing to someone across the world is the potential lack of accountability. You’d be dealing with an international contract. Communication could prove difficult. Overall, it would be difficult to verify. Furthermore, if you’re trying to hire a lawyer to work for $20 per hour, your business may have bigger problems.

  In the end, the idea of outsourcing the service industry should unfold in an interesting way as the emerging market countries expand their economies.

• 23. Kristine Spencer  |  February 1st, 2011 at 7:08 pm

  I also had no idea that outsourcing for small business was a possibility. I usually stereotype outsourcing with manufacturing or call center positions. I have heard of hospitals outsourcing their x-rays and such to India to be read overnight, but never of something specifically for small business. There are definitely positives and negatives to outsourcing. I think that for certain tasks or projects, this small business outsourcing could work well. The IP risks are probably the biggest risk in my mind. Yes, purchasing things through the internet in China or India are also risky, especially when you have never met the person, but some might be overlooking the possible risks of purchasing practically anything online, even in the US. Granted, there is a lot more US legal protection when one purchases something from a seller who is also in the US. I do agree that using these services could be risky, but the article “Buying from Suppliers Online” lays out a very useful method of managing some of these risks.

  For someone in India or China that has an education and is looking for a foot in the door, I think that this would be great opportunity to make relationships and build a name for myself on a global platform. Outsourcing is beneficial to Americans trying to cut costs, but there is benefit to the foreign workers as well. For someone with limited resources trying to start a business, this could be a cheap option to get started. Outsourcing does damage existing US jobs, which is harmful to the US citizens and economy. My parents own a small business, and big corporations with lower costs are a constant threat that my family can relate to. I feel that the trend of outsourcing is too far along in the trend to resist or stop it. That being said, I fully support keeping jobs in the US, because as we all are aware, Americans could desperately use them. American businesses and workers should stay ahead of competitors (other countries) on trends and technology, but we should still protect and support US industries and jobs. American jobs are worth more than saving a few bucks. We should be investing in our own country’s development and technology.

• 24. Ashley Ogden  |  February 3rd, 2011 at 9:55 am

  When I think of outsourcing to China, I generally think of manufacturing, not lawyers, designers, etc. This gives me a whole new meaning to the thought of globalization. It is taking outsourcing to the extreme. I liked the blog, “China: Factory to the World or Market” that discussed whether outsourcing was for your business or not. I think that a company needs to consider all the risks and benefits of outsourcing before deciding if it is the right choice for them. I think it also depends on the person, I personally wouldn’t take the risk, you could say that I am “risk adverse”. I am sure that there are people that are “risk seekers” and would love to save a few bucks by outsourcing. It also depends on what your issue is. If it is something that could make or break your business, I would definitely not trust someone from another country who I have never meet, but that is just me.

• 25. Jason Jay Sharma  |  February 7th, 2011 at 11:30 pm

  These services are absolutely invaluable and I speak from first-hand experience. For the past two years, I’ve been working with an online travel website which has utilized outsourcing in a similar fashion (not through these websites in particular, but through acquaintances). For the most part, we hired individuals in China to take care of the basic, yet tedious, tasks involved in keeping partnership links updated on the main sites. In this sense, we were not sharing anything specific or special about our company, and to this day it works wonderfully! Because of this arrangement, I can skip repeating a simple task 700 times–I do it once and pass it along to our “employee” in China.

  The real question is, is this ethical? Well, like the Chinese people who travel from the countryside to the cities to work 12 hours a day, 7 days a week in factories, the individuals marketing themselves on these sites want to and are willing to do this type of work. Isn’t that what really matters? They are choosing to do this of their own free will. That being said, it’s on the shoulders of the hiring parties to treat these individuals fairly. I personally would always like to pay the individuals we outsource to, just a little more than anyone else would.

  Again, this comes down to the same situation as factory workers. Those people shift to factory work, as these people market themselves as outsource employees because they are getting something better than working traditionally in their local area. If you can make more money and are happy doing the work, I say to them, go for it! And to those looking to utilize these individuals, I advise you to limit the information you share to a need to know basis.

• 26. Tim Easton  |  February 8th, 2011 at 7:52 pm

  The concept of small companies outsourcing their work is one that I have not thought of before. This blog post was very interesting and made me think about all the decisions that needed to be made before a company outsources. The cost benefit of outsourcing is clear, and that is what large companies will mainly make their decision off of. I have not really considered IP protection a danger of outsourcing, because I have only thought of large companies as the ones that outsource. I think of these large companies as being well protected, so it would be hard to steal IP and the foreign company wouldn’t want to lose that business. As a small company I would definitely be hesitant to outsource my ideas and IP. I think working with a graphic designer would be fine, but an engineer or lawyer might be a little too risky for me. The websites like Guru are amazing for small businesses. I have a friend who is a graphic designer, who is not nearly experienced as the guy you have the link to, and my friend makes $30+ an hour. These cost savings can be huge to a small startup company.

• 27. Sarah Weinzapfel  |  February 12th, 2011 at 1:05 pm

  I continue to be a little torn on the idea of outsourcing. When I think of the footage I’ve seen on Wal-Mart, I can’t help but think that those business strategies are hurting our country. I never really thought about outsourcing in this context. For the little guy though…I think it’s almost necessary. The big guys outsource to get bigger. I think the little guy needs to outsource to stay alive. I had no idea these websites existed. I looked around a little and the prices seem to have risen from the time this post was put up. That’s to be expected I suppose.

  Although using outsourcing this way seems sensible, I would personally be a little timid to go this route. I think the only way I would feel comfortable using this resource and not feel like I was risking a competitive advantage was to somehow gradually build a working relationship with someone specific. Maybe use them for a smaller, non-compromising project and things of that nature here and there until I felt a sense of loyalty.

• 28. Tyler Sereno  |  February 13th, 2011 at 2:50 pm

  I believe that it is ethical to utilize the opportunites and resources provided by outsourcing. It seems that with these online services to outsource, that it is much easier for “the little guy” or small start-up business to benefit from the advantages of outsourcing. Money is always an issue for people who are trying to start a small company and these resources could be the determining factor of their success. It is amazing to see how important outsourcing is becoming for both large firms and “the little guy.”

  If I were trying to start a small business, I would look into using these services. It is risky and I am a risk-averse person, but it seems to beneficial to pass up. So as we have learned, when making a decision on something like this, it is important to minimze the risk as much as possible. I believe the article is very helpful and provides useful tips to consider when trying to minimize risk.

• 29. Tara Millard  |  February 15th, 2011 at 12:45 pm

  This article is unbelievable, both for the capabilities presented and the implications of these services. From having a Bachelor in Architecture, pursuing an MBA, and heading to Law School, these outsourcing opportunities, if widely adopted, can make bartending a more lucrative future career for me. I think we need to ask ourselves to what point is outsourcing healthy.

  I don’t believe these services are ethical to use in a small business format. If a company is making a product that will be distributed globally, then by all means use a global approach to business…..outsourcing. On the flip side, a small local business should pull from the local labor pool as to not diminish the economic situation even further in our country.

  It is important to not only ask yourself whether the savings are worth the risk to you, but also whether the consequences are worth the risk to the society in which you reside. While these services may prove promising in the short run, their long term effects are dwindling at best.

  I would not personally use these services, and I hope that they don’t gain vast popularity anytime soon.

• 30. Anthony Kallioinen  |  February 15th, 2011 at 7:45 pm

  They say that some of best paying jobs are not advertised. The sites Guru, Elance, Ninemotion, Rentacoder and Getfriday have flipped the process of looking for a job on its head. Instead of searching for job postings, workers place their qualifications on these sites in order to capture positions that companies seek to fill (outsource) but do not advertise. I don’t know if I would use these sites to outsource work. I prefer to see who I am working with and understand their point of view. In my research on virtual teams, there exists a very large gap in the amount of trust, synergy and communication that hinders the working relationship. Obviously with certain tasks, saving time and money are enough motivators to endorse outsourcing.

  I enjoyed the ‘Buying from Suppliers Online’ blog post. It gave some good advice on what type of information to obtain and how to leverage it for your benefit. I was surprised when the author said that wiring money was the way it was done. I suppose this makes sense, but I am still wary. I guess if one does the advised audit of the company, looking at their reputation and speaking with their clients, and authorizes a third party company to perform quality checks on the products, one could probably do business with that online supplier. Like the post said, at some point you just have to trust people.

  The dilemma is whether the savings are ethical and worth the risk. I would say that yes, outsourcing the work is ethical, at least I do not see anything unethical in providing work for those in other countries for the savings in this country. As for if outsourcing is worth the risk or not: provided that outsiders are not privy to information related to your company’s competitive advantage, it can be worth the risk if the work is time consuming and you are afforded the chance to focus on other profitable areas of the company (CAD drawings/web design).

• 31. Kyle R.  |  March 3rd, 2011 at 10:33 am

  This is not a new concept for me. I worked for a small business years ago that was considering to manufacture a new product that was not in the United States at the time. Since they were limited on the amount of capital they had to invest, outsourcing to China was considered. After a significant amount of research, they chose not to develop the product, primarily because of the risks involved with outsourcing. They were concerned in dealing with an international company they couldn’t interact with frequently. Another deal breaker was the high risk of losing this proprietary information to somebody who could manufacture and sell with lower costs.

  I agree with the decision of my former employer. It would be very tough for me, as a small business, to outsource anything that was a critical component of my business. I could see outsourcing something like website design, or design work, because you’re your just paying for a service that can’t necessarily be used against you. The cost savings are very significant, but what risks do they come with… potential to have trade information stolen or exposed, taking jobs away from the U.S., and the risk of paying for a service you never receive. If I ever did this though, I would do extensive background research on the person I was doing business with. I still feel that there are significant risks associated with small businesses outsourcing, and most likely never would…unless I had to.

• 32. Ben Raymond  |  March 6th, 2011 at 4:13 pm

  I think outsourcing is usually thought of as a big business concept but it makes perfect sense for small business to outsource as well. Were seeing an addition to traditional forms of outsourcing such as large factories and call centers in the form of individual skilled laborers. These laborers are becoming more and more popular and are a good option for anyone looking for lower cost labor. Many of these laborers provide services of very high quality for very low prices. From what I’ve heard the biggest issue is communication. This does provide some risk and even more so if you are outsourcing a physical product. I think the article did a very good job of covering the necessary steps to lower possible risks.

  Personally I wouldn’t be opposed to outsourcing. The goal of growing a business is to increase profits and if you can save on labor then I see that as a viable option. If considering doing this however you must be aware of the risks. I think that there are steps you can take to greatly reduce the risks but their will always be some risk in doing business in such a lesser regulated area. Do your due diligence and know that at some point your always going to have to trust someone.

• 33. Matt Streiter  |  March 6th, 2011 at 7:42 pm

  I believe the answer to this, as in many business related questions, is it depends. If you are introducing a new product I would definitely hold off on outsourcing. With weak legal protection in China I would definitely be cautious of revealing your secret sauce. I know I personally would have a very hard time trusting a company overseas even if I had consulting or auditors reporting to me about them. Who knows if the 3rd party is being paid off!

  Even if it is a modification of an existing product or idea I feel that it would be more beneficial to make domestic connections for suppliers in the short run. This way I would feel like I am in more control of the variable factors while trying to see if your product is going to be a lucrative investment. If the product then does turn out to be lucrative I would consider the thought of outsourcing to reduce costs.

  Reading the article it seems that there is a strong business opportunity in transferring funds between countries. Being that I worked at a bank I encountered people loosing money in overseas investments all the time. Even if you make a payment plan for the products you are still vulnerable to losing you initial investment payment. Creating a middleman to handle the transfer of funds would seem to add a lot of value to domestic companies trying to take advantage of globalization.

  At last, being that I personally have done some purchases off of Ebay from overseas companies, quality is very hit or miss. I completely understand what the blog is saying when talking about China just trying to get product on the ship and out of their hands. They aren’t going to let you return it!

• 34. Chris F.  |  March 12th, 2011 at 12:01 am

  I agree with those above that when I hear about outsourcing, it is usually something to do with manufacturing instead of design or legal services. Now as far as outsourcing other aspects of your business, I don’t know if I would personally use those services. I believe in the adage “You get what you pay for.” If you are cost conscious, you would want to utilize the services that give you the performance that you seek for the cheapest price. However, if you outsource a business sector or a core competency, you will have to bear the risks involved. Like anything that has high risks, high reward, there is the opportunity to make it big; whether or not the probability of reaching that success is something you can stomach is up to you. The savings you could get from the business ordeal should be weighed against what you expect to lose. If a potential loss to a company is more than what you expect to gain, then don’t do it. However the hardest thing is to determine all of the potential factors that could go wrong and develop contingency plans to mitigate the risks.

  As far as ethics go, I believe that if someone is willing to accept a job, then they are willing to subject themselves to whatever is necessary to deliver on a commitment. The ethics also lie on the people doing the hiring to treat the employee fairly in accordance with whatever ethics codes govern the business. For businesses, as long as it is not illegal, I believe outsourcing can provide a competitive advantage to grow and develop. But it is also up to the business to determine how much intellectual property you allow your hired employees access to and to do the homework to manage the risks involved.

• 35. J Vail  |  March 14th, 2011 at 12:46 pm

  This is a good complement to the video “British Get Rich in China”, and the message in both is that outsourcing is a very attractive solution for production, as long as you know how and who to interact with. I had not previously heard of websites that offer outsourcing solutions on such a small scale, but I guess it makes sense that with the advent of large-scale outsourcing eventually smaller niche markets would develop. To answer the initial question, if I had the opportunity to use outsource certain processes in order to reduce costs, I definitely would, but I would either be well informed of these interactions before engaging in them, or find the right people to do so for me.

  There is plenty of risk in these services, but there is risk inherent in any business transaction, just like there are plenty of fraudulent businesses in the United States (thinking of asset dumps for major investment firms). You can’t compete in an industry when you don’t understand the competition of the supply chain, so I think it’s fair to place responsibility for failure on the players, not the game. The one risk that is justified is that competition can track your outsourcing strategy and emulate it, but again, these are the risks you inherit that counterbalance the advantages of outsourcing.

  Initially, I would have thought it unethical to utilize these resources, but from what I have learned in these other blogs the ends justify the means. Although the margin for industries decrease and the majority of factory workers put in more hours at a low wage, at the end of the day this outsourcing creates jobs. Furthermore, it creates structured jobs in low income areas that are far more advanced than other employment opportunities. A common mistake would be for a casual observer to think ‘man, if I had to work in a factory for 12 hours a day for a small wage, it would be terrible’, but at the same time that is because they haven’t endured worse conditions than that beforehand.

• 36. JP Salazar  |  March 18th, 2011 at 12:13 am

  This is perfect example of how technology is making our world smaller. It is interesting to see how as the world becomes more connected the availability of goods and services continues to grow. Ebay started just fifteen years ago and restructured how goods are sold on the internet. The auction setting allows for sellers and consumers to compete in a truly supply and demand based economy. Due to the information technology available today, people from around the world can now interact and share information as easily as if they were in the next room (sometimes even more conveniently). The idea of outsourcing services to cheaper markets is not a new idea, but the development of new technology and the ease of information sharing gives this opportunity to customers looking for small scale contractors. Now individuals from around the world can compete for small scale contracts that would traditionally be handled by a local source. This increased availability leads to increased competition which gives rise to the situation described in this post. Small businesses can now find contractors for a price that is affordable.
  There are definitely some problems that can arise from this new situation where small scale outsourcing is viable. First, local companies will now have to compete directly with a market were labor costs are much lower. If they do not lower their prices, these companies will not be able to compete and will go out of business. However, if they do lower their prices, they can not afford to pay their employees as much and their profitability will go down. Second, there is the very real risk of having your intellectual property stolen from outside competition. Many of the countries where this cheap labor is available, like China, have very lax copyright laws. By outsourcing your work, you run the risk that your information might fall into the wrong hands.
  In the last decade, we have heard quite a bit in the US about the problems associated with outsourcing. It is because jobs are moving out of the country to areas of cheaper labor that many people are finding it have to find a job. But this is a very self centered view. If we want to continue to compete in a world market and demand that our wages stay high, then our skill set needs to warrant such payment. We have to be able to distinguish ourselves from the rest. Americans can’t have it both ways. Companies only care about paying for a service. So if Americans want to make more money than someone from India or China for the same job, they better be able to contribute value appropriate for what they are being paid. In other words Americans should not expect the amount of outsourcing to decrease unless they can show employers why American workers are worth the investment.

• 37. Omar Pradhan  |  March 18th, 2011 at 1:26 pm

  Going back to our primitive roots, back to when we figured out how to communally extract and store more surplus calories than we needed in any given day…we saw the advent and rise of specialists within and among the globe’s dispersed human tribes. Over time, the specializations became more and more sophisticated, from tribal specialist at creating bows and arrow heads to town lawyer and doctor. This same specialization in the factory is what made the Model T a success for Ford. To me, there is nothing unethical about paying someone fairly for performing a skill which you do not possess or do not have the desire to perform for yourself. As to the issue of emerging global capacities, I see no reason why technology can’t bridge previously unimaginable expanses to allow for consensual arrangements between individuals. As the article points out, what is unconventional is the new way in which we are finding ourselves stretched, across vast distances, to garner the necessary trust that engenders the anticipated relationship. Forging trust in this new way is a challenge but we must not lose sight of why we are doing this in the first place - to save time, money, or the headache of having to do it ourselves. Thus, if we don’t enter into our outsourced arrangement smartly, we have no one to blame but ourselves; as evidenced by the sage advice in the Silk Road International Blog, diligence is as important as it ever was.

• 38. Kevin K.  |  December 27th, 2011 at 5:16 pm

  When thinking about outsourcing, one normally thinks of sending manufactured goods to foreign sweatshops or delegating call-center services to India. So depending on what my hypothetical company did I can certainly see myself using it. However, I feel that despite the economic advantage there are some downfalls that, on the positive side, will fill my wallet, but leave me with a decidedly “dirty” feeling. This does not even take risk into account, especially with China where your idea can easily be stolen and reproduced for pennies on the dollar.

  Ethically speaking, outsourcing certain aspects of a business is perfectly fine. Although what weighs heavily on American companies these days is the shipment of American jobs overseas, leaving many US workers jobless for the sake of a few extra dollars. But that is the price of competing in the globalized world. If you can’t beat them, join them is what I’m saying — just be prepared for the risk and weight of ethics.

• 39. Vladimir  |  December 29th, 2011 at 7:55 pm

  Outsourcing is a risk some small businesses will have to take, depending on the nature of the business. I would probably outsource if I owned a small business whose success was greatly dependent on cost-cutting. Getting a product or service at a lower price wouldn’t be the only factor I consider in my decision to outsource. How much will I save? What results have my competitors achieved through outsourcing? If many of my competitors outsource, how much more power will I have with my domestic or local suppliers? How much time and money will be spent on managing the outsourcing process? What risks do I face? Is the work I need done suitable for offshoring? Outsourcing isn’t as easy for the little guy as for a large business. Large companies can exert more power on the suppliers and have the resources to make the process work for them. A small business takes a greater risk when deciding to outsource. If I were going to outsource to China, I would do my homework. The “Buying from Suppliers Online” gave me a taste of what’s involved. I wouldn’t just trust a “We’ll take care of it all for you” website that wants to attract the outsource-enthusiastic business owner.

  Going overseas for non-manufacturing help would be more useful for most small businesses. The graphic designer who charges $20 per hour is much less expensive than a US-based graphic designer. There is also less risk in hiring a graphic designer than a manufacturer. You know who you’re dealing with, the person has a greater incentive to deliver high quality work, you don’t have to worry about returning defective merchandise, and you don’t have to worry about their product conforming to US import requirements.

  I think it’s ethical for small businesses to use these resources, from an individual perspective. Sometimes they need to use them to stay in business. Sometimes they don’t need to use them to stay afloat, but will use them for higher profits. It’s not unethical to manage costs to maximize profits. But it still doesn’t feel right to hire someone in another country instead of someone who lives down the block.

• 40. Daniel Fleek  |  December 31st, 2011 at 1:51 pm

  Just checked out guru.com. I thought it was a really good example of globalization. On the site, anyone who needs something done can have anyone do it for the cheapest price. It even posts the amount of money paid out by the employer and made by the “freelancers” as well as the feedback for both. I thought it was a useful tool for small businesses to get things done at a globally competitive price, especially for work that can be transfered online. However, since the price of most jobs is cheaper than if these jobs were done by US standards, it wouldn’t be a good tool for employment opportunities.

  Ethically, if I owned a small business with narrow profit margins, I would use these sites since most likely, my competitors are probably using them too. However, I think that large corporations should not use these tools because they contribute much more towards the US economy then a small business that is barely making it. Therefore, I hope more policies are put in place to protect from such outsourcing, especially for large corporations.

• 41. Charles Dornbush  |  January 21st, 2012 at 2:20 pm

  I didn’t realize that you don’t have to be a big company to outsource to China and other Asian countries. I had no idea that websites like Guru and Alibaba existed, the Internet is speeding up the process of globalization. With these new resources it is easier than ever for foreign vendors to defraud naive business people. While websites like Alibaba look like a great starting point to finding potential suppliers I agree than 3rd party verification is essential to reduce risk in international business.

  I recently had a similar problem with a Chinese website selling football jerseys. I bought two jerseys for about $30 a piece that would usually retail for over $200 in the U.S. When I received them, one was not what I ordered. I e-mailed the company and sent pictures and they conceded they made a mistake with my order. Despite this they would not send a replacement or discount my order. Just an example of how you have to be careful doing business with people thousands of miles away.

• 42. Grant  |  February 3rd, 2012 at 7:59 am

  Having worked overseas on a variety of projects, and having seen the problems that can come with cultural and communication style differences, I would be concerned that one would mistakenly put too much confidence in a resource without doing additional due diligence. I would consider using those as jump of points to create a list of potential contacts, but from there, I would feel the need to further investigate the person or organization.
  My brother in law developed an innovative fishing lure which he outsourced to China and it took a lot of work to get the manufacturer up to speed on quality and to understand the value of certain aspects of the design that were not negotiable. In the end, it worked out, but he spent a lot of energy making his problems into their problems, so that they could be on the same page.

• 43. Georgia  |  February 6th, 2012 at 4:29 pm

  It is hard to trust people in business these days. Stories of people getting ripped off are sensationalized on the news, while those that went smoothly are ignored. But isn’t it better to be overly cautious rather than getting ripped off? But at the end of the day there is only so much you can do, especially if you aren’t planning on being in the Chinese factory daily. Its like what I say when I am getting ready to fly, “the pilot doesn’t want to crash either.” Most companies want return customers.
  I thought it was especially interesting that paying more doesn’t equal better quality. Being as specific as possible when asking questions seems obvious, but it could be easy to be unaware of certain aspects. If I choose to outsource I would spend a large time researching and talking to others who had outsourced to China and pick their brains for weaknesses. Using the third parties to validate quality seems like a good idea, but what is to say that they are not lying too? Everyone trusted Alibaba, but that didn’t stop them from pushing through fraudulent claims. I think that the moral of the story is that if you want something done right do it yourself. If you are outsourcing be as involved as possible and do your research.

• 44. Jeffrey Brown  |  February 26th, 2012 at 11:46 am

  I feel It is not only ethical to use these types of resources for small businesses & entrepreneurs, but it could actually be considered a bit of an equalizer amongst industries. Big businesses are always going to find a way to outsource to make production of goods and services cheaper. This outsourcing creates a barrier-to-entry in many markets, blocking small businesses from ever being competitive. By allowing the smaller players to outsource as well, it levels the playing field and allows for more competition in the market - a good thing amongst the western view!

  I personally would consider using these resources, but I would do lots of homework before I ever sent money or gave information about my business to those overseas. It would depend on the nature of the work but in certain circumstances, I could definitely see benefits to outsourcing work. Is there a risk involved? Of course! What in business is not risky?

• 45. Fred S.  |  March 4th, 2012 at 8:05 pm

  I would use these services if my new venture could benefit from them and I didn’t have any connections to sources through personal contacts. I would try to source as much of the business as possible from America. However, if it means breaking into a market that requires lower costs than America has to offer and most of the big competitors have outsourced their production, it may deem necessary to outsource to foreign countries. For example, almost every bicycle company, that is not specialty or custom made, manufactures some or all of their products in Taiwan or China. The bicycle manufacturers in these countries are very well established. If a new business wants to make their own bicycle, they basically get in touch with one of these manufacturers and pick which stock tubing sets they would like to use. The manufacturer then assembles them together. A lot of these new businesses may even manufacture their products in the same factories as the industry leaders.

  I see no ethical problems in outsourcing that is not done in malpractice. It is risky, but with proper due diligence in researching suppliers and talking with the industry, it is a worthy source. Yes, a new business has to be careful about giving away their trade secrets. However, ideas are cheap and most ideas have been heard or said before. A company just has to make sure they do not give away their “secret sauce” which makes their product more valuable than their competitors.

• 46. Keith Cody  |  March 8th, 2012 at 7:11 pm

  Technology’s “it” man, Tim Ferris dedicated a whole section of the The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich (Expanded and Updated) to outsourcing your life. You can also read his blog.

  Tim really takes it to the next level. Rather than just hiring an Indian Lawyer or Chinese programmer, he subcontracts everything. Even his email is read by his assistant. The Christmas presents for his kids are bought by his assistant. He even has his assistant in Bangalore negotiate a lower rate on his cell phone contract in America.

  The Wall Street Journal has an interesting article trends in the economy. It used to that every job outsourced to asia created 2 jobs back in the United States. That is no longer the case: Big U.S. Firms Shift Hiring Abroad.

  Just two weeks ago, two US House of Representatives introduced legislation that makes companies that make companies that move call centers overseas ineligible for grants or guaranteed loans from the federal government, a move aimed at stemming the tide of jobs heading to nations like India.. http://rupeenews.com/2012/02/how-indian-call-centers-hurt-us-economy/.

  If you are a manufacturer of anything but high end goods, you pretty much have to outsource to asia to be competitive. You should learn as much as you can. You should even learn when to bring the business back home. You should read this article on CNN: Why We Left Our Factories in China.

  Having been involved in technology for a number of years, I remember when outsourcing made the rounds in the early 2000s. They promised you could reduce your labor costs by 90%. When all was said and done, if you add in overhead, you only reduced your costs by half, but depending on your line of work, you may have also damaged your brand. http://www.usatoday.com/money/economy/2010-08-06-manufacturing04_CV_N.htm

• 47. Ashley Tyra  |  March 12th, 2012 at 5:58 pm

  Personally I would be very cautious about outsourcing to China. Reading articles like these makes outsourcing seem even more difficult and risky than I thought it was. If at some point I were to outsource in my future, I would make sure to take all the necessary steps that were described in the Silk Road International Blog. Showing suppliers from China that you have a vested interest in the process of purchasing from their factories greatly reduces the chances of being taken advantage of or having your idea stolen—continually checking in on the quality of the product before you make final payments for your order shows suppliers that it is necessary for them to deliver a quality product that will meet export and import standards of both countries. The article ‘Why Alibaba Is Not Your Complete Answer To China Sourcing,’ shows that assuming a source is reliable without checking facts is naive.

  Taking ethics into account, each business will have to ask why they are deciding to outsource. If it is a matter of survival, it makes it more ethical to conduct business outside the country to obtain lower costs. If the motivation for finding suppliers out of the country is related more towards increasing profits without regard to moral standards, some might say it would not be ethical. Either way small companies need to consider the risks involved in taking advantage of cheaper prices abroad before they jump into outsourcing.

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