Outsourcing to America

It’s the buzzword on every World Trade Organization flier ever created: Globalization. Globalization is the theory that by removing trade restrictions across the globe, industry reaches a point of perfect competition, which steadies prices and encourages innovation. The mystic solution to all things poverty, globalization is an extension of capitalist visions dreamed long ago by great minds, back before Stagflation and the digital revolution.

In theory, it’s actually a pretty good idea. As time goes on, more and more countries will industrialize, get high speed data connections and take a swipe at the G8 for market dominance on any number of fronts. The brief (read: decades or centuries) economic turmoil nations will endure will ultimately be noted as ripples in the bank ledger of the infinite. But as new economic gods rise to topple the Titans of old, what happens to the foot soldiers on the front lines of the coming war?

They lose their jobs.

Which is why the software industry finds itself in a very precarious situation. Workers are already suffering through a supply shock due to more and more advances being made to eliminate “assembly line” work every day, and exporting labor is only making things worse.

One billion in people in India and other Eastern nations are more than willing to do our grunt work if it means they can rake in a buck. They’ll do anything for a fee much lower than what it would cost in the States: customer service, email spamming or programming. You name it, they’ll hang the shingle from their door.

How can you blame a company for http://www.computerworld.com/printthis/2003/0,4814,85642,00.html” title=”Computer World” target=”_blank”>sacrificing just a bit of quality, blurring some nationalistic lines and getting for just pennies on the dollar? Sure, regulations are a bit spotty in other countries, but consumers are saving money on pretty much anything, when it doesn’t have “Made in the USA” stamped on the tag. That’s a decision we, as a country, decided was A-OK long ago.

We’ve been struggling with the duality of the American ideal for decades. Is it unpatriotic to buy foreign products, even though our capitalistic nature demands we search out better deals for perpetually growing shopping lists? The communists showed solidarity, and look where it got them!

In a way, these Indian service firms are about as capitalistically American as you can get. We’ve got money, and they’re more than happy to take it. But as in all nations crawling their way out of the “economic basket case bloc,” cheap labor isn’t going to last forever. In fact, the price of outsourcing to India is already beginning to climb, just as it did in Mexico. And talented IT professionals born in India are making their way to the States in droves, much http://www.economist.com/world/na/displayStory.cfm?story_id=1352810” title=”Economist” target=”_blank”>like talented Indian doctors.

This diaspora throws an interesting monkey wrench into the outsourcing mix. Sure, companies go to where labor is cheaper, but labor goes to where the money is better. The guys who are good enough to make it into Western firms on Western turf often leave, because while it’s quickly improving in India, the standard of living in the USA is still a bit higher. This means the pool of talent over there is quickly depleting. So India isn’t the country to worry about. No, to see the real threat to American industry, we need to look across the Himalayas into China.

China’s one billion-strong nation is on the grow, and they’ve caught the industrialization bug something fierce. As factories sprout up in what were once farming fields and gas prices soar to transport goods across a landmass bigger than the continental U.S., children are being educated with a very Eastern approach to Western production. Think of post-war Japan, only with ten times as many people. The Chinese government is quickly warming up to the idea of tipping the scales of commerce in their direction, and within the next century, it’s likely they’re going to have a shot at doing it.

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And, remarkably, they’re taking a stab at gaming.

They’re investing http://english.people.com.cn/200507/31/eng20050731_199405.html” title=”China Invests in Online Games” target=”_blank”>$1.8 billion dollarsin online games over the next five years alone. Consider the fact their population is quickly moving into the digital foray; that only means more customers for everybody. Combine that with their recently passed laws to curb online gaming “addiction.” What do you see? A change in development paradigm; all of a sudden the gaming market is flooded with people forced into casual gaming, and the Chinese government is buying for $1.8 billion worth of games to fit that standard. If American companies can even hope to capture the hearts and minds of the Chinese populace, it means they’re going to need to show up at the Chinese Embassy in Washington, D.C., with some very revolutionary ideas on how to make a good online game. And it has to be more than a money grab if they want to remain in the land of a thousand dynasties for any discernable length of time.

But the Chinese aren’t going to pay for games developed externally. Why would they? Part of a country’s investment in homegrown production is the return will potentially increase their GDP. This doesn’t mean foreign countries will necessarily be left in the cold, it just means foreign countries will have to open a new base of operations run by Chinese-born and naturalized Chinese citizens. They’re using our globalization dream against us. They’re using their money to lure more investment capital to their shores.

Western companies are already dipping their toes in the market, and China’s virtual version of the Homestead Act is merely heating the pool to a comfortable temperature. The government has proved masterful: Not only do they offer a potentially larger gaming population than the States (they currently boast 1.5 million WoW subscribers, roughly half a million more than North America), they now offer cold, hard cash for setting up shop and catering to their residents.

It’s not hard to foresee the future. China will more than likely continue to lean toward freeing up their market, but also isn’t afraid of throwing money into developing markets previously cornered by America. Big firms, lured by grants and a truly massive customer base, will quickly start targeting Chinese customers, developing games with their mindset, and local laws, in mind. Imagine a game based on Hero, complete with the propaganda. Or enjoy a trip to the moon with Chinese astronauts. How about an MMOG with characters that only live three hours?

And when Chinese gamers are the forefront of development choices and marketing, Chinese gamers will pursue gaming-related degrees, both domestically and abroad. And then they’ll go home, use national funds to start their own companies, and design great games we in America can only dream about until they get around to localizing them to our tongue. But all isn’t lost. Sure, games will be produced in the Orient. But luckily, no one likes coding wind blowing through the trees.

Someone’s still gotta do that, right?

Joe Blancato is a Contributing Editor for The Escapist Magazine, in addition to being the Founder of waterthread.org.

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