Well, if that's the case, then it isn't a problem at all, it's an opportunity, and the market will solve it just fine. A company will realize that it is penny-wise but pound foolish to outsource new development and they will leapfrog companies like Cisco
True, BUT
This problem is not readily visible to your average bean counter inside the company, you don't account for loss of opportunities nor for cost of time-to-market "lateness", so this typical project from Cisco that I related, still looks like a savings, remember, the "savings" were reduced from 66% to 40% (while experiencing an "invisible" loss of sales revenue of 4M $)
It is also difficult for a new startup, to break into Cisco's market, unless the startup is well funded, say by the Chinese government, let's call this hypothetical company Huawei.
Get my drift: This WILL be resolved, but not necessarily in a way that is beneficial to the US, Cisco, or the laid off engineers in Silicon Valley.
We are, in other words, engaged in "Capital" destruction here, where the capital I'm referring to is both money and market and human-capital.
For China and India, this is purely good, but I'm not sure that we as shareholder, workers or citizens should ignore our own interests for the greater good of the economy in India or China.
Note, that the stock price of Cisco hasn't been going anywhere lately! I'm not sure that outsourcing is the main reason, but I know that when our customers are doing outsourcing to India, and China, they are opening sales opportunities to "knock off" companies like Huawei etc. at the cost of sales to Cisco.
Peter |
