Protectionist Backlash Against Outsourcing

The Associated Chambers of Commerce and Industry of India ^ | July 2003 | ASSOCHAM

[RockyMtnMan]

It appears the government of India is conspiring with American corporations to lobby our legislatures. This looks to be the action plan for taking away our jobs to enhance the Indian economy.

"The ITES/BPO industry has great potential to transform India into a global power by reducing unemployment thereby raising the overall standard of living of the masses. Undoubtedly, a joint industry-government partnership is essential to attain this."

I had to reformat the document from PDF so there might be some quirks, but it is word for word. The link is a PDF so make sure you have acrobat.

[L`enn]

Csnnot blame India for doing so. It is in their interests. The onus is on the traitorous US corporations for their role in this farce. BTW how come since all these brilliant MBA CEO's started shipping jobs overseas has the economy went in the sinkhole? Any correlation? Like to see what these "brilliant" strategist can spin to 'splain that away.

[big bad easter bunny]

We wouldn't want to help over a billion people find thier way into the high tech world. Why they might become consumers instead of well educated people with no way out. Lets bring back the cotton gin, think of all the new jobs we could create in the south.

[RockyMtnMan]

I don't like the idea of a foriegn power conspiring with American companies to control legislation that is not in the best interest of the American people. Our government must act on our behalf an not the people of India.

[RockyMtnMan]

Do you really think they'll be the same kind of consumers we are?

There have been numerous articles that point out how ridiculous it would be to have over 3 billion people (don't forget China) increase their wages enough to buy our goods. Even if we did manage to "level the market" through labor exportation it would take 20 or more years.

[sinkspur]

From the editor of INFORMATION WEEK:

Business Technology: Let's Remake Future, Not Relive The Past April 7, 2003

By Bob Evans

I grew up in a small industrial city in western Pennsylvania some 40 years ago. Many thousands of men and some women worked in the plants and factories there that churned out rolled steel, pipe, tubing, transformers, specialty copper, and more. At the end of the high-school year, my older brothers could walk down to the mills and get high-paying jobs for the summer. The local radio station had a program around 3:30 every afternoon called "The Factory Whistle" that more than 10,000 workers listened to on their drives home. Grocery stores restocked their shelves on Friday mornings because paychecks arrived home Friday afternoons. The pervasiveness of those jobs and their interrelationships with the lives of everyone in the surrounding community--the interwoven fabric created by those steady, essential, vital jobs--was something we took as normal, natural, and unchanging.

And then those jobs began to disappear--slowly at first, and then with a suddenness that in hindsight is hard to imagine. From just that one small city, 15,000 jobs disappeared. Forever. In some cases, the work moved to specialty mills or to lower-cost foreign producers; in others, the demand for the types of steel and other products that those plants were superb at making suddenly changed, and the mills were hopelessly unable to adapt and evolve as quickly as the markets they served. We had perfected our past but were woefully unprepared to create our future.

In that context, what I'm about to say could well anger and perhaps even alienate some people very near and dear to InformationWeek, but it needs to be said because it is the truth. For a variety of reasons, many parts of the IT industry--and along with them, tens of thousands of jobs--as we have known them are disappearing, and they will not return. Lots of work in applications development, programming, call centers, integration, operations, and other jobs requiring skilled technologists are leaving or have left this country, and they're never coming back. What, then, is to be done?

Well, we can seek regulatory relief or legislative intervention or tariff strategies or lawsuits, but they're all a waste of time. Because buyers will seek the highest quality at the lowest price, and some producers in other countries have clearly demonstrated that for some projects, they can match the quality of our software and services while also beating us--badly--on price. Not surprisingly, the global market is rewarding those other countries for that.

So no, this challenge isn't about legislation or taxation or regulation--it's about innovation and forward thinking and the courage to change. Not just knee-jerk change in reaction to what someone else is doing and that is patterned after the past but, rather, forward-looking change that helps to create the future in which companies are truly connected in real time with their customers through the power of new types of software that today are merely prototypes, in which business-technology workers become businesspeople with indispensable technical prowess, in which IT professionals judge themselves not by technical certifications but rather by how relevant and valuable they make themselves--constantly--for their employers and customers, in which business technologists make possible today what couldn't be done yesterday, and in which CEOs and CIOs aggressively lead the transformation of their phenomenal business-technology organizations from keepers of the old central flame to lighters of new fires of revenue opportunity, market insight, industry knowledge, customer value, and optimized business processes.

We cannot recapture the past, but we can surely make the future. And the time to start is now.

[sinkspur]

There's not going to be any "legislation." All the government can do is refuse to issue government contracts to businesses who offshore; it CANNOT forbid private companies from using resources outside the US.

If they try, Indian companies can offer to set up a subsidiary to the company, using Indian employees.

Legislation can't stop this trend.

[RockyMtnMan]

Pure crap from a trade rag who's readership is CxO's.

I know the high-tech field better than a vast majority of people in the industry. Offshoring software development will cut the legs out from under the entire industry. Enrollment in the sciences will drop to near zero because no-one can get a job after college in the field.

Software engineering requires years of experience in the field to attain these high skill levels. How do we build skills without the opportunity to do so?

[superloser]

Legislation can stop this trend by adding a tax on foreign labor.

Here is a proposed equation seen elsewhere on FR:

Tax = (% Foreign Input - % Foreign Sales)

So, if a product is 100% produced outside the US, it gets a 100% tax if it is only sold inside the US.

Don't underestimate the ability of Government to tax. They can get very creative even without OUR help.

Just so you know, yes, it passes Constitutional muster as being both an excise tax and a tariff.

[Dissident1]

We wouldn't want to help over a billion people find thier way into the high tech world. Why they might become consumers instead of well educated people with no way out.

To consume what? Products from China? The only thing the US makes today that the world wants to consume are Marlboro's, Jack Daniels and porn.

[lelio]

BTW how come since all these brilliant MBA CEO's started shipping jobs overseas has the economy went in the sinkhole?

Why the "brilliant" dig at MBAs? They are brilliant ... for their own short term gain. That's why we need governmental leadership on this offshoring trend. Businesses are always going to look out for their bottom line, they can't be counted on to worry about the health of the economy.
I think Bush needs to learn that part of leadership, he can't just sit back and watch the market. I don't want him to control the market, to pick the winners and losers, but rather for him to set some ground rules down. And one of those should be that in order for America to growth there has to be some incentive to keep jobs here.
Bush has "that vision thing" (to use his dad's phrase) downpat on our war on terrorism. Now just look at the economy and realize that we're heading for disaster.

[sweetjane]

Here is another strategy for them:

They should use their resources to bring India from third- world to industrialized country as fast as they can. That way India can generate its own demand for these services.

I know a small company (owned by a family member) that uses Indian programmers. They have since 1998. In one of my many debates with this family member, I tried to explain that it was just another form of imperialism. He's a big-time lefty and I thought he'd get the imperialism thing. But he didn't get it at all.

[eccl1212]

government CAN regulate, legislate and tax imports and exports...
and labor could be reasonably defined as both...

the question is not whether, but IF this should be done... and to what extent.

We exported a lot of our manufacturing jobs.
We touted the "high income high-tech" sectors as replacements for the lost jobs. Now we have done the same with the technology sectors.

Globalism principles at work and I have NO clue as to how it will play out, other than degradation of our standard of living and a full tilt run towards service and retail sector jobs, hamburgers, tacos and window washing. Don't get me wrong... those can be good jobs... but hardly useful for supporting a family...

no solutions... just questions of course.

[lelio]

He's a big-time lefty and I thought he'd get the imperialism thing. But he didn't get it at all.

Oh he got it. Its just when you're in the driver's seat you begin to like the ride.

[RockyMtnMan]

Technology is the first wave, soon to be following by all other high value positions. The catch fraise is BPO, Business Process Outsourcing, which means an entire business process not just the automated pieces.

This is the beginning of the end for the "working class" unless government intervenes.

[SoDak]

It's hard to blame corporations either, really. The company is like a handful of water. It will probe everywhere to find the leak, and exploit it when it finds it. This is what a good management team does. It finds the best bottom line for it's stockholders. If government policy changes to seal the leak, it won't be used, and equilibrium between competing companies is restored, and increased costs are passed along. I guess the question is, are we willing to pay more for computer services in order to keep the jobs American?

[sinkspur]

government CAN regulate, legislate and tax imports and exports... and labor could be reasonably defined as both...

How do you propose the government impose taxes on outsourced work? Lines of code?

This can be done via the net, almost completely furtively.

IBM's Indian workers are not taxed; they work for an Indian subisidary. Any outsourcer with a presence there could set up a similar subsidiary for any company.

[big bad easter bunny]

I have a lot of friends in India, the answer is of course they would be. They have the same draems and ambitions we do, they are human just like you!

[sinkspur]

So, if a product is 100% produced outside the US, it gets a 100% tax if it is only sold inside the US.

This development work is not "sold"; it becomes part of the infrastructure of a company.

You need to know what you're talking about, first.

[RockyMtnMan]

Governments role in the economy is to ensure a level playing field for all competitors. Laborers compete for work, therefore the playing field must be leveled to foster competition. Until they bridge the gap in wages there is no competition, therefore India holds the monopoly on labor.