Thursday, October 25, 2007

Economics of Outsourcing: MN Goes Global

BANGALORE, INDIA -- Minnesota Gov. Tim Pawlenty's trade trip took a welcome turn today, as the governor learned that Indian firm Essar Global has officially closed on its acquisition of Minnesota Steel Industries and will proceed with plans to build a $1.6 billion taconite-to-steel mill on the Iron Range.

News of the historic deal filtered to the trade mission staffers as they toured the massive campus of the software firm Wipro here, in an area known as Electronic City.

Wipro is "considering increasing the number of jobs in Minnesota and perhaps putting a production development or a training center in Minnesota. So we are going to continue to have dialogue with them about that," Pawlenty said. Wipro currently has 1,600 workers in Minnesota, generating about $100 million in annual revenues from work done in the state.

Wipro does sizeable business with several of the companies represented on the trade mission, including 3M, IBM, and Best Buy, as well as Northwest Airlines and Target Corp, Banerjee told the trade delegates.

Bottom Line: Trade works both ways. Outsourcing from the U.S. TO India provides Indian companies with the dollars and resources to invest IN the U.S., like this deal.

"This will be one of the largest investments in the state. If you look at a $1.6 billion investment in Northern Minnesota, this is certainly one of the largest investments in a very long time," Pawlenty said.

It's very likely that without outsourcing TO India over the last decade, this investment of $1.6 billion in MN would have never happened. Lou Dobbs, listen up.

(HT: JJ Howe)


At 10/25/2007 9:16 PM, Anonymous Anonymous said...

Outsourcing teaching might also have a positive effect on America's bottom line.

Prospective students who might be ineligible for traditional education due to financial and/or scheduling challenges might benefit from low cost, flexible schedule education opportunities. A high quality English speaking Asian Indian professor would be relatively cheap compared to his/her U.S. counterpart.

American students could "go to live interactive lectures" via the Internet and the "foreign" professor could remain in her or his preferred geographic region.

Additional outsourcing could be accomplished by having very high quality teaching assistants, tutors and markers sourced from overseas.

This way everyone wins. We get a high quality education for more of our citizens at a lower cost and people in other countries get to raise their standard of living.

At 10/25/2007 10:50 PM, Blogger Mark J. Perry said...

I have written about this topic before:

Here is the link to Tutor Vista:

At 10/26/2007 11:40 AM, Blogger juandos said...

Well Professor Mark, when I was younger I didn't see the upsides of global trade in goods and services... I was stumbling through the forest because my vision was narrow at the time and I could only see one tree at the time...

I'm NOT totally happy with every facet of global free trade but over the last two and half decades I've come to appreciate all its upsides...

Dan Griswold's Trading Up: How Expanding Trade Has Delivered Better Jobs and Higher Living Standards for American Workers actually does a pretty good job it seems reflecting my own experiences...


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