Offshore outsourcing creates American jobs, redux

The Chicago Tribune reports today on how offshore outsourcing is aiding in the creation of more small business start-ups — which help to create American jobs. The story focuses on one Chicago entrepreneur: While offshore outsourcing has come under political fire in a tough job market, entrepreneur Jai Shekhawat said the approach has enabled him ...

By , a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast.

The Chicago Tribune reports today on how offshore outsourcing is aiding in the creation of more small business start-ups -- which help to create American jobs. The story focuses on one Chicago entrepreneur:

The Chicago Tribune reports today on how offshore outsourcing is aiding in the creation of more small business start-ups — which help to create American jobs. The story focuses on one Chicago entrepreneur:

While offshore outsourcing has come under political fire in a tough job market, entrepreneur Jai Shekhawat said the approach has enabled him to create jobs in Chicago. His business-to-business Web-based software start-up, Fieldglass Inc., wouldn’t be employing 66 people in the U.S., most in Chicago, if not for the company’s decision to outsource overseas from the get-go, he said. In fact, without outsourcing, he said, “I wouldn’t have started the business.” In a difficult economy, offshore outsourcing has become essential for many emerging companies, experts say. “I can’t think of one of our portfolio companies that doesn’t use offshore outsourcing,” said Travis Winkey, general partner at BlueStream Ventures in Minneapolis, one of five venture capital firms investing in Chicago-based Fieldglass. “As a start-up, you care about getting as much mileage out of every dollar. A great tool to leverage is offshore,” he said…. While politicians may bemoan offshore outsourcing as a missed opportunity for domestic tech workers, venture capitalists often take a different view. They see its potential in stimulating new businesses, which in the long run will help companies add jobs domestically. “If you outsource 10 positions, it might help you employ 20 in the U.S. It has a multiplier effect,” said Deborah Farrington, partner at StarVest Partners in New York and a Fieldglass director. Developing new software such as Fieldglass’ InSite is a perfect example of how cross-border employment can pay off, said Winkey, who is also a director of Fieldglass. “If we had to build out that same kind of engineering, we would have had to sacrifice in other areas. It allows us to hire more skilled positions here,” he said.

Which helps to explain the continued expansion of small business hiring that I alluded to several months ago. Virginia Postrel posts another example of how (onshore) outsourcing facilitates small business growth.

Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner

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