Chocolate and Gold Coins

Thursday, June 30, 2005

The Benefits of Outsourcing

Subra Srinivasan who blogs at 30's dog reads my blog and read the thread at Crooked Timber that I pointed to in this post. Crooked Timber always has the best comment threads. Subra found this exchange:

abb1 :

I mean, suppose you have a teenage son. You agreed to pay him, say, $50/week pocket money in exchange for him doing some chores. Let’s say one day a neighbor’s kid shows up and offers you to perform the same tasks for $30/week. What should your response be if you’re a rationalistic and impartial liberal person?

Jet to abb1:

Tell your kid to hire the neighbor’s kid and keep the $20 difference, of course!

Subra adds:

Isn’t this what off shoring and outsourcing is all about? I am so amazed by the simplicity of the response, to a potentially loaded question.

Read Subra’s post. Read the Crooked Timber comment thread.

Another Crooked Timber post with an excellent and hilarious thread is this classic: Ask a 19th Century Whaling Expert.


  • Your son hiring the neighbour's kid is a good idea but it might just be shortsighted. The neighbour's kid will learn those skills (that exalted child labour is supposed to teach as argued in another post). So one kid learns to shuffle money and the other a job. Jobs are not just about money, they also mean skills and the consequences/benefits of those skills.

    By Anonymous Anonymous, at 3:11 PM  

  • Hi Anonymous
    My kid would be learning the most important business skill there is: getting others to do his work. This is the essense of entrepreneurialism. He can use that his whole life.

    By Blogger Michael Higgins, at 3:46 AM  

  • Anonymous,

    I think that was kind of the point that I was making. Your kid has the money, has to no longer juggle the old job. So, he could go and learn something new, more value adding, more challenging. Not only are two people benefiting now, but there is the possibility of newer, better work being done.

    By Blogger Subra, at 5:05 AM  

  • Depends on the skills learnt. Some are fundamental for future development. I was making a wider point. When was the last time a college-kid sent to run a multi-million corporation. There are a lot of skills and lessons learnt while rising in the ranks of an organisation.

    Shuffling money is no big deal. The only real barrier to entry is availability of capital.

    Subra, in the real world, an outsourced guy can take the risk of training in a new skill while supporting his family and trying to maintain a decent standard of living. It is a risk. But we all crave for some stability in life. To add to the above, people become less capable of learning new skills as they grow older. There could be exceptions but it is a well-documented fact. I wish we were all computers but we are not.

    As for the specific example, you and I know that such a money shuffling kid is the one who will go and play some game, eat too much and get fat.

    PS: Rockefeller started out as a bookkeeper.

    By Anonymous Anonymous, at 8:59 AM  

  • New resource on the subject: Outsourcing Through Rentacoder explains the proper way to outsource online before making mistakes via trial and error.

    By Blogger DocuMaker, at 9:32 AM  

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