So much for Lou Dobbs' efforts...
I've been seeing this trend all around me in Silicon Valley. VCs and angel investors are pushing startups to move much of their development abroad to places like India and Pakistan. The reality is this. These startups cannot afford to get their products developed in the amount of money invested in them by investors...as smaller amounts are invested and more expected of them, they have to go abroad.
While I understand the concern that we're shipping jobs abroad when so many Americans (including many good friends of mine) are unemployed, I also realize this fact: many startups may not be in business were they not able to outsource development and thus build a product with the limited financial resources they have. And while many of their jobs are abroad, just by the fact that these companies are in business they are employing people in the US as well. So is a few jobs better than none. I would say so.
But let's face it. The primary reason why jobs are going abroad for big companies and small ones alike is the fact that you can increasingly hire competent people abroad for a fraction of the cost. According to this Wall Street Journal story (subscription required):
The Valley's ideal start-up business these days is the "micro-multinational," a company that from its inception is based in the U.S. but maintains a less-costly skilled work force abroad. Venture capitalists also are prodding young companies in which they already own stakes to turn themselves into micro-multinationals.
One recently funded start-up business, Solidcore Systems Inc., is a case in point. The company, which makes security software, is based in Palo Alto, Calif., and has a U.S. staff of 16, including its chief executive, chief technology officer, engineers and sales-and-marketing executives. It also has 15 employees in Delhi, India, including a top financial officer and engineers, and six contract employees in Pune, India.
"It was set up that way from the beginning," says Nick Sturiale, a general partner at Sevin Rosen Funds of Palo Alto, which put $5.5 million into Solidcore along with venture firm Matrix Partners. "The key is not just labor costs, it's productivity." When engineers in the Valley are going to sleep, those in India are waking up, he says.