A recent X post by US entrepreneur Nick Huber, taken during business hours in Austin, Texas, highlights a troubling trend for the American workforce. The message is clear: outsourcing is becoming a popular business strategy, and American workers, particularly those working remotely, could be at risk.
Huber emphasises that countries like the Philippines and Latin American (LatAm) regions have workers who can perform tasks just as effectively, if not more so, than their American counterparts. Thanks to AI advancements, these workers offer higher productivity, fewer complaints, and comparable language skills. And all of this comes at a significantly lower cost.
"There are people in the Philippines and LatAm who can do your job better than you can for $5 an hour," Huber noted in his X post. "And work 60 hours a week, no complaints, and with AI, their English is better than yours," he added.
The Cost Factor: A Game-Changer For American Workers
Outsourcing is an obvious choice for companies looking to cut costs. As Huber points out, American businesses can now achieve three times the productivity for only 20 percent of the cost. This shift poses a significant challenge for workers with six-figure salaries and degrees in liberal arts.
Huber reveals that 80 percent of his workforce is outsourced from Latin America and the Philippines. He calls this a "business cheat code" that could dramatically alter the landscape for remote workers.
The implications for Americans include fewer job opportunities, reduced job security, and intense competition from highly skilled and low-cost workers overseas. Huber cautions that those not in management positions, leading teams, sales, or creating substantial value are at the highest risk.
As more companies realise the benefits of outsourcing, the need for these roles may decline, forcing many American workers to adapt to a rapidly evolving job market.
This aligns with a 2023 report suggesting that Western countries can leverage India's vast English-speaking population to drive growth in business and sales by hiring them as remote workers, providing them with career opportunities, and simultaneously saving money.
As outsourcing grows, remote workers in the United States face an uncertain future. With businesses focused on maximising profits and productivity, the emergence of global talent poses a significant challenge. Adaptability and skill development may be crucial for navigating this changing landscape.
The Challenge Of Global Talent
Based on additional context, some may suggest Huber's X post is a "disguised advertisement" due to his promotion of Somewhere.com in the following post, but the impact of outsourcing cannot be denied.
Outsourcing lowers entry barriers and intensifies competition. While increased competition is generally encouraged in free markets and often benefits consumers, it can negatively impact businesses that struggle to adapt.
Outsourcing allows new entrants into industries where labour costs would have been prohibitively high otherwise. A startup company aiming to manufacture electronic devices may face significant challenges if it were forced to hire American factory workers, but it can now readily find enthusiastic and affordable skilled labour abroad.
Barriers to entry that were once insurmountable due to the capital requirements needed at the startup phase can now be significantly overcome. Outsourcing also encourages new competition by fragmenting and disintegrating the supply chain.
As a result, new entrants can take advantage of the fact that manufacturing may occur in a different geographic region than product design and customer support, which might be located in yet another region.
The Outsourcing Landscape: Advantages And Disadvantages
Outsourcing is the business practice of contracting with an external party to perform services or create goods traditionally handled in-house by the company's employees. Companies often implement outsourcing as a cost-saving measure.
According to Forbes, outsourcing has advantages, including avoiding hiring additional employees, accessing a broader talent pool, and benefiting from lower labour costs. However, outsourcing can also have disadvantages, including relinquishing control, encountering communication challenges, and facing potential quality issues.
