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& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | JUNE 30, 2003 TESTIMONY What I Told Congress Here's a transcript of columnist Chris Kenton's thoughts on overseas outsourcing before the House Committee on Small Business
Cymic [my company] has been in business for 15 years in the San Francisco Bay Area, providing marketing services to large technology companies like Motorola, Intel, and Dell, as well as to startups like Ascend Communications -- a company we worked with from the time they were five partners working in a garage until they were sold to Lucent [for what was then worth $24 billion in stock]. We're all too familiar with the process of creative destruction, even in our own business. Two years ago we'd grown to 35 employees, earning more than $3 million in annual revenue, but in the wake of September 11, we lost 95% of our sales and were forced to lay off 90% of our people. Our principals have had to face down both business and personal bankruptcy, while losing our offices and most of our equipment. We've made heroic efforts to survive the current economy. Part of our survival effort depends on developing new products and services to remain competitive. In the past, we relied on our own software programmers to develop new products, or we used one of our many development partners. But with literally no labor or capital resources available, we simply can't afford such investments in these economic times. Recently, we defined a new piece of software and received local estimates averaging about $5,000. That sounds like nothing, until you consider that we have to weigh every investment we make with the mortgage payments on our homes. Through an online search we were able to find a programmer in Argentina willing to develop our software for under $200. The software is now in the final stages of development, and we'll be offering it as a new service to our clients within the next six weeks, which represents a new opportunity for much needed revenue for our company. Our project pales in comparison to the million-dollar outsourcing deals among large corporations, but it highlights a lesser-known trend of overseas outsourcing among small businesses. My concern today is that the cry for new regulations to deal with outsourcing among larger corporations will have unintended consequences for small businesses like mine that use overseas development to create opportunities that would otherwise not be open to us. Since many of my clients are large technology companies, I'm well aware of the plight of workers who've lost jobs to L1 and H1B visas. I strongly believe we should not allow the immigration system to be exploited for the production of cheap labor, but I also believe we should not allow trade policies to be exploited for preventing the development and patronage of offshore labor markets. While the intended effect of such policies is the protection of American jobs, I believe the unintended consequence will be a stifling of opportunities for small business. The potential loss of white-collar jobs is certainly a legitimate concern for congress, but before we consider new regulations, I think we need to be honest about the root causes. It's ironic that many of the technology jobs moving overseas today are the very same jobs that created the infrastructure that makes outsourcing possible. And it's naive to believe that the loss of such jobs will be stemmed by preventing outsourcing. Today, thousands of programmers are working on advanced systems to automate much of the programming done by humans -- creating the opportunity to outsource to the cheapest labor source of all, computers.
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