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Outsourcing "Has Been Going On Forever" - Intel's CEO

Outsourcing "Has Been Going On Forever" - Intel's CEO

Related Links:
  • Saturday Essay: Why Outsourcing is a "Tremendous Opportunity" for US Economy
  • Intel Goes From Hard Core to Dual Core
  • "We've Had Some Fumbles," Says Intel's Otellini
  • Offshore Outsourcing: Magic Bullet or Dirty Word?
  • 1 in 4 IT Jobs Going Offshore, Says Gartner; One Major "Offshoring Failure" in 2004 Predicted
  • IT Trends: "Intelligent Computing" is Greater Threat than Outsourcing

    "'The world is always ready to receive talent with open arms.' That's really what outsourcing is," said Intel's CEO Craig Barrett recently in an interview with the San Francisco Chronicle. He was quoting a fortune cookie slogan which he feels sums up the whole issue very neatly.

    Globalization has played its part. "The world's economy in the last 10 years has opened up," said Barrett, "and you've had a seminal event, of half the world's population joining the world's free economic system almost overnight, in the 1990s."

    Like Intel, Barrett explains, "many companies are finding the bulk of their revenue comes outside the U.S., and you have to have resources outside the U.S. to support that." He adds that Intel, for about the last two decades, has had about 40 percent of its employees outside the United States.

    Asked what the US can do to counter the consquences of globalization in terms of job losses to overseas, Barrett listed four calls to action. The education system is first and foremost, he said: "we need to fix the K-12 education system and have a higher influx of kids into college in the technical areas."

    The second one is research and development, "because R&D is the seed corn for products and services of the future," said Barrett.

    Spending on infrastructure is crucial too, he said - meaning not bridges or roads but communications infrastructure, information technology infrastructure:

    "You know that the United States is a laggard in broadband. We're kind of a third-world country from a wireless standpoint."

    The last thing is what Barrett called "the Hippocratic oath of 'Do no harm,' but not applying to doctors, applying to governments."

    California, he said, is "a wonderful example of where government rules, regulations and policies are not only restrictive, but detrimental, in driving business away. Other countries are aggressively pursuing investment, much more than the United States."

    Asked what advice he would give to his successor as CEO of Intel, Barrett, who is due to retire next year, said:

    "I will tell my successor: 'Make sure you have a passion for the technology and the business, and make sure you try to translate that passion to your employees and the company as a whole.'

    People do a good job when they love what they do. They do a good job when they really enjoy and believe in what they do. So, I would make sure that my successor has those characteristics. I would also tell my successor that you make sure that you work hard and play hard. Balance your personal life with your professional life, but do both at 200 miles an hour."

    Barrett became Intel's fourth president in 1997 and CEO in 1998. He is set to retire in May.

     Related Links:

  • Saturday Essay: Why Outsourcing is a "Tremendous Opportunity" for US Economy
  • Intel Goes From Hard Core to Dual Core
  • "We've Had Some Fumbles," Says Intel's Otellini
  • Offshore Outsourcing: Magic Bullet or Dirty Word?
  • 1 in 4 IT Jobs Going Offshore, Says Gartner; One Major "Offshoring Failure" in 2004 Predicted
  • IT Trends: "Intelligent Computing" is Greater Threat than Outsourcing
  • More Stories By Jeremy Geelan

    Jeremy Geelan is Chairman & CEO of the 21st Century Internet Group, Inc. and an Executive Academy Member of the International Academy of Digital Arts & Sciences. Formerly he was President & COO at Cloud Expo, Inc. and Conference Chair of the worldwide Cloud Expo series. He appears regularly at conferences and trade shows, speaking to technology audiences across six continents. You can follow him on twitter: @jg21.

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    Most Recent Comments
    an00n 09/28/04 10:21:15 AM EDT

    Outsourcing means taking money out of the American economy (wages that would be paid to someone getting taxed and buying stuff over here), and sends it overseas where that money (generated with the assistence of US-taxpayer funded US infrastructure, and taxpayer funder corporate tax breaks) now instead helps a competitor to America. That's not a good thing.

    The free trade of high paying AMerican jobs for cheap overseas labor also would not naturally end until some natural balance in global salary levels has been achieved... Now, when you realize that the US *currently* has one of the highest salary levels in the world, but only represents ~5% of the global population, you'll begin to realize where that eventual equilibrium may be achieved... it won't be the midway point between current US and Indian/Chinese/Russian salaries, but rather it'll be much closer to what those Indian etc salaries are right now, since their population sizes swamp our own.

    Now, if you actually give a crap about quality of life over here, and your ability to earn a wage that'll pay an American mortage rather than paying for a Chinese apartment (not much use unless you live in China), then you'd be concerned about this, but don't go looking for enlightened CEO's to stop gunning for expense-cutting bonuses in this way, especially since there duty to shareholders is to maximize profits for them, regardless of anythign else (such as whether by doing so they're screwing the American economy, and screwing the job prospects of their shareholders and everyone else).

    The only thing that will stop the quality of life in America being dragged down to what'll be supported on an Indian salary is indeed, as Kerry says, to have the government provide disincentives to do so... What I'd support is tax penalties that are proportional to the difference in cost of living between the US and where a company outsources to, since that levels the playing field. I'll happily compete with anyone in the US for a programming job, since I'm good at what I do, and my competitors have pretty much the same cost of living as myself... but trying to compete with someone on the same skill level who's cost of living is 20% of mine is going to be a losing proposition since they can work for 20% of the salary that I need. That's not competition, it's slaughter, and it may be good for globally reducing labor rates to a minimum (if that for some reason is your goal), but it's sure not good for the Americal lifestyle that we enjoy, even if you want to roll out the old excuse that I'll be able to buy a VCR at Walmart for $28.99 instead of $32, because of the Chinese labor.

    I'd be voting for Kerry anyway based on the danger to America that Bush represents, but I certainly also support him on this issue - his policy will be good for working Americans, while Bush's outsourcing-happy policy is only good for the independently wealthy and business owners to which lower US labor costs are a plus rather than a negative.

    Mark 09/27/04 01:03:30 PM EDT

    Wow. And this guy is a CEO? How long has it been since he has been in the trenches?

    The problem is not Outsourcing. It is the type of Outsourcing - Offshoring.

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