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<p>Via the very same logic that you invoked, I’ve always been mystified by why more employers do not outsource more finance and consulting work. After all, instead of hiring an American investment banking analyst to do little more than basic Powerpoint and Excel modeling gutwork - while being paid a cool $150k right out of school, with no work experience - why not hire 5 seasoned analysts from India or China for $20k each? And yet they never do it.</p>
<p>That’s why much of the discussion offered by others on this thread regarding cost/benefit tradeoffs may not be entirely apropos, for that all presumes that employers behave economically rationally. And that is not always so. A number of reasons exist for believing it not to be so. </p>
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<li>Numerous key employers have no profit motive whatsoever. That is because they are not even companies at all. By far the largest employer in the United States is not a company, but rather the Federal Government, with state and local governments also being significant employers. They together employ thousands of software engineers and IT workers. Surely even somebody who has even a modicum of familiarity with the news would agree that the government is not exactly a paragon of economic efficiency. Rather than being responsive to economic incentives, they are responsive to political incentives, and the outsourcing of American government software jobs to foreign workers would be politically hazardous to any politician who dared propose it, regardless of how economically justified it might be.</li>
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<p>Much the same could be said for the government contracting industry to which Globaltraveller and others have discussed, and which basically serves as appendages of the government. While firms in that industry are profit-incentivized private companies, their revenue is paid from government dollars and hence is necessarily influenced by the same political pressures that inheres to in-house government work. The government would be hard-pressed indeed to hand a multi-billion dollar IT contract to an Indian IT outsourcing firms, even if no national security issues were at stake. That’s almost certainly why the Washington DC/Maryland/N-Virginia region has enjoyed (relatively) strong economic growth in the last few years. </p>
<p>Yet another major US employer that cares little for profits is (nonprofit) academia. For example, one of the largest employers in New York City is…NYU. One of the largest employers in Boston is…BU. Universities employ plenty of software developers and IT staffers, yet are not strongly motivated solely by profit incentives. Nor would we as society want them to be, which is why we exempt universities from taxes. </p>
<p>*Many ostensibly profit-seeking firms actually exist to fulfill other goals. Such a characteristic is especially common amongst privately held firms that are therefore not beholden to financial markets. Walt Disney once famously proclaimed : “I don’t make movies to make money, I make money to make movies.” Business owners often times cite the advantage of ‘being their own boss’ rather than purely the opportunity to make money as the main reason that they run their own business. Many firms therefore serve as vehicles by which the owners pursue their own non-profit-maximizing personal aesthetic goals. Right now there are surely hundreds of tech firms in California and Massachusetts run by quirky perfectionist leaders who are far more interested in developing interesting technology rather than simply making maximizing profits. {As a case in point, who the heck would actually economically rationally choose to spend an entire two years on programming and animating just the horseriding sequences of a video game when those sequences represent only a tiny fraction of the game, especially when most video games sales shelf-life is less than 2 years? Let’s face it - nobody is going to buy a video game just for a few horseriding scenes.[Yet</a> that’s exactly what Jade Raymond and her Ubisoft team did for Assassin’s Creed.](<a href=“http://www.computerandvideogames.com/148805/interviews/assassins-creed/?page=2]Yet”>http://www.computerandvideogames.com/148805/interviews/assassins-creed/?page=2) } </p>
<p>*Heck, even plenty of publicly traded firms do not always engage in economically rational behavior. The last few years has offered dramatic proof of this within the financial services industry, having nearly managed to destroy themselves and succeeding in doing so in the case of Lehman Brothers, which had formerly thrived for more than 150 years. {But that’s not to overly pick on Lehman, for the fact is, the vast majority of the finance industry was technically insolvent in 2008 and would have suffered the same fate as Lehman if not for unprecedented government intervention.} Xerox, for example, built one of the greatest computing R&D skunkworks in history in Xerox PARC - investing untold sums, employing some of the most brilliant computing talent and developing technologies that serve as the backbone of modern-day computing today such as laser printing, GUI’s, Ethernet, LCD’s, and object-oriented programming. All the same, Xerox has earned practically no financial return from PARC. It’s East Coast analogue - Bell Labs - has probably produced more basic scientific research (having won numerous Nobel Prizes) than most universities have yet likewise has earned little financial return. </p>
<p>The upshot is that any any answers to why employers don’t outsource more CS jobs - or heck, why employers do anything at all - has to be derived from more sociological and psychological reasons. For example, as long as many tech employers continue to believe - perhaps irrationally - that innovation is best performed in high-cost Silicon Valley or the Boston/Cambridge area because of something ‘magical’ in the air there, then there will continue to be plenty of high-paying jobs in those areas. Silicon Valley and Boston are two of the (relatively) healthier regions in the nation.</p>