U.S. Manufacturing Not Needed in Tech
We've had a great running argument in this space about the importance of manufacturing to the overall health of the American economy. My opinion -- that it it is vital that we build things ourselves to better improve our products, has been supported by several Harvard Business School professors.
But HBS faculty are independent thinkers. And so comes David Yoffie, arguing that in the tech sector at least manufacturing smarts is not vital to the country's economy. Writing in Harvard Business Review Yoffie declares:
"The future of U.S. competitiveness in high tech industries such as computers, software, communications, and electronics may depend more on the transition to services than trying to retain the country's manufacturing base."His point: Today's top technology companies make their money selling services on top of products, a group including IBM (technology consulting), Apple (music distribution), Amazon (cloud computing) and Google (search advertising).
"Maybe the most important point to make is that U.S. has been moving towards a service economy for the last 100 years. In the long run, services will become the core of the U.S. tech world as well."Read Yoffie's argument, Why the U.S. Tech Sector Doesn't Need Domestic Manufacturing. Then come back here and answer this question. If we become the world's leading tech service provider, what prevents other countries from copying and eventually surpassing us in this arena as they have in others?
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Outsourcing Is High Tech's Subprime-Mortgage Fiasco
HBS professor emeritus Robert Hayes argues that U.S. companies that outsource to lower their costs "have deluded them into thinking they are improving their profitability. In actuality, they are simply cashing out their intellectual assets."