S3Corp. Tech Blog

In a surprising twist, some of America’s most powerful tech companies are breaking away from their established playbook on offshoring factories and jobs, challenging the once-unquestioned dependence on China. The provocative question they’re asking: “Who needs China?” With bold, energetic slogans, they announce, “Let’s invest in new, state-of-the-art factories!” and, “Let’s launch a sweeping program to train thousands of educators who will, in turn, prepare a high-tech workforce for tomorrow.” All this, they claim, will spark a new wave of job creation and give American corporations a competitive edge.

At first glance, it sounds like an inspiring plan—a bold vision to revitalize the American middle class. But, here’s the catch: the United States is nowhere in this vision. Instead, these tech juggernauts are shifting their production, not back to American soil, but to Vietnam. According to Silicon Valley’s millionaire leaders, labor costs in China are no longer low enough, so they’re eyeing outsourcing Vietnam, where wages are half those of Chinese workers.

Vietnam Signals the Titans of Tech

In October, Intel CEO Paul Otellini took the stage in Ho Chi Minh City and delivered an enthusiastic “Hello, Vietnam!” to the crowd gathered for the inauguration of Intel’s billion-dollar chip manufacturing plant, which now provides jobs to 4,000 Vietnamese workers. As if that wasn’t enough, Intel has committed to reshaping Vietnam’s education system to better serve corporate interests by funding training for 87,000 Vietnamese teachers. Imagine if Intel directed that kind of educational investment toward American teachers!

Intel is far from alone. Hewlett-Packard (HP), another globe-trotting tech behemoth, has also built a facility in Vietnam, outsourcing software engineering work originally done in the U.S. In the name of making their “American” corporations more competitive, these companies, which receive generous subsidies, protections, and privileges from the American government, are opting to abandon American workers in favor of cheaper alternatives abroad. Given their disinterest in repatriating jobs or capital, one might question why our government continues to support them.

Economic Realities and the Shrinking American Middle Class

For American workers, these choices have stark consequences. Amidst declining wages, long-term unemployment, and a shrinking middle class, Americans are watching in frustration as corporate profits, stock values, and executive compensation soar to new heights. Adding insult to injury, while U.S.-based corporations are, in fact, increasing payrolls, they’re creating jobs in other countries rather than at home.

Over a recent two-year period, American companies expanded their foreign workforce by an astonishing 729,000 jobs, even as they cut approximately 500,000 domestic positions. Take Hilton, for example, which decided to relocate one of its U.S.-based call centers to the Philippines, citing “maximizing operating efficiencies” as the rationale—a euphemism for “chasing cheap labor.”

Similarly, JPMorgan Chase, fresh from collecting $25 billion in Wall Street bailout funds, is shifting its telephone banking operations from Troy, Michigan, to the Philippines. Dell, too, has shuttered its last PC factory in the United States, while expanding its workforce in China. And then there’s Hewlett-Packard, which has relocated its human resources department from ten U.S. states to Panama. So, if an HP employee has a problem, they’re advised to “take it to Panama.”

Offshoring Software Development: Profit Over Product

Replacing American workers with cheaper labor abroad doesn’t improve product quality, nor does it result in cheaper goods for consumers. Instead, the savings on labor costs are pocketed by corporate executives and investors, contributing to a growing concentration of wealth. This practice is less about efficiency and more about lining the pockets of the few at the expense of the many. Given this context, is it any wonder that everyday Americans are feeling increasingly frustrated and alienated?

The Myth of Trickle-Down Benefits

Despite the growing backlash, some academics continue to downplay the impact of job offshoring. A Harvard business professor recently shrugged off these concerns, declaring that “when companies succeed abroad, people at home succeed.” This tone-deaf response only underscores the disconnect between academic theory and the reality faced by millions of American workers whose livelihoods are sacrificed in the pursuit of corporate profits.

Imagine the irony of this professor’s words: they imply that the loss of jobs and industry at home is somehow a boon for American society. It’s the same hollow rationale that has long been used to justify offshoring—the belief that wealth will somehow trickle down, benefiting the entire economy. However, the evidence suggests that this trickle is nothing more than a mirage, while the wealth gap widens and the American middle class continues to erode.

A New Chapter in the Offshoring Playbook

What we’re witnessing now isn’t just a routine search for cheap labor. With Vietnam, these companies are taking offshoring to new extremes. Not only are they transferring jobs, but they are also actively working to reshape Vietnam’s education system and training infrastructure to better align with their corporate goals. While Intel’s commitment to training 87,000 teachers in Vietnam might seem like a noble gesture, it starkly highlights the lack of similar investments in the American workforce. These companies are, in effect, laying the groundwork for Vietnam’s long-term success in tech, positioning it as a future powerhouse in high-tech manufacturing and software outsourcing.

This new trend raises serious questions about corporate accountability and patriotism. Why should U.S. taxpayers continue to subsidize companies that show little commitment to creating jobs or contributing to the economy at home? Why should American consumers buy products from companies that prioritize profits over patriotism, choosing to support foreign workers while American families struggle to make ends meet?

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 Jim Hightower produces The Hightower Lowdown newsletter and is the author, with Susan DeMarco, of “Swim Against the Current: Even a Dead Fish Can Go with the Flow.”