Cutting Off Their Noses to Spite Their Faces

I still can’t understand it.

The other day, one of my editors told me that the book I’m currently writing will be laid out in India. As a matter of fact, last year’s edition of the same book was also laid out in India.

She went on to tell me that the production department for the company had been downsized from 168 people to less than 20, with the majority of those jobs going to India.

What followed was a discussion of what the company could possibly be saving by making such a change. Sure, the Indian workforce is probably making a lot less per hour. And there’s a huge reduction in other payroll costs for things like vacation pay and health care and employer taxes.

But don’t they consider the cost to the U.S. Economy of putting 148+ people out of work? People who may not get jobs? People who may contribute to the home mortgage crisis by failing to pay their mortgages? Who may need to burden the country by requiring economic assistance to live and get healthcare? People who are a lot less likely to spend disposable income on things like books simply because they don’t have disposable income?

148 people, you say. That’s nothing. How is that going to affect the U.S. economy?

Well, it’s not just one company shipping jobs overseas. It’s hundreds or thousands of them. That equates to thousands of people out of work, many of whom may become unable to afford the goods or services offered by the companies that let them go.

How ironic. By acting in such an idiotic, short-sighted way, these companies are actually reducing their customer base. So while their costs are lower, their sales are likely to be lower, too. Net effect? Zero change in the bottom line!

When I was a kid, we called that “cutting off your nose to spite your face.” Wikipedia has this to say about this particular phrase: “Cutting off the nose to spite the face is an expression used to describe a needlessly self-destructive overreaction to a problem.” Although it usually refers to an act of revenge, I think it could apply to this situation, too.

How can companies reduce their bottom line without shipping jobs overseas? It’s pretty simple: use freelancers.

One of my other publishers has a very small in-house production staff. But it also utilizes a number of freelance production people all over the U.S. When the in-house staff is busy putting books together, it turns to its freelancers and assigns books to them. They get the job done right in a timely manner. They have to — if they don’t do the job satisfactorily, there’s another freelancer waiting in line behind them to do that job or the next one.

Freelancers might get a higher wage than in-house people, and they surely get a higher hourly wage than overseas workers, but they only get paid when they work. So you’re not paying them to hang around the office during slow spells, when there’s no work to do. And, if you pay by the job, rather than by the hour, you only pay for the work done — not time hanging around the water cooler or spending a few extra minutes at lunch.

Employers don’t have to pay taxes for contract labor like freelancers. They also don’t have to offer benefits like vacation time or healthcare. There’s no need to send them for training or to maintain a big human resources department to keep track of them.

And since many freelancers work from their homes, they’re not commuting to and from work. That means they don’t contribute to traffic, pollution, or greenhouse gases.

And since they do work and they do get paid, they have disposable income to buy consumer goods and services. (I’ve been freelance for 18 years now and I can assure you that I’m quite a consumer of goods.)

So my question is this: why don’t more companies explore the possibilities of using freelancers instead of shipping jobs overseas?

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4 thoughts on “Cutting Off Their Noses to Spite Their Faces

  1. I so agree with you. The company (aerospace related) that I retired from is doing the same thing not only for design work but also manufacturing. It is costing them untold amounts of time and money to support the transfer of technology. Just one of the reasons I retired early.

  2. I think the reason hiring freelancers isn’t as popular as it should be is because corporations don’t function on purely economic lines. They like the idea of control and even ownership and neither apply to a relationship with a freelancer.

  3. Maria,

    Free-lancing works – if we have such things as guaranteed (I won’t use the other term) medical and access to other things currently attached to full-time employment. Unless and until these things change many of us will be in limbo all the while Government (busy feeding the rich) will be telling us to be “self-reliant”.

    Mark in Dallas

What do you think?