Outsourcing backlash hits India

NY Times via Seattle Post-Intelligencer ^ | February 17, 2004 | SARITHA RAI

[sarcasm]

BOMBAY, India -- The rising political reaction in the United States to the loss of some American jobs to workers overseas is creating a whiplash effect among India's leading technology companies.

"The dramatic buildup of opposition before the U.S. elections is disturbing," Jaithirth Rao, the chairman of a leading software and call-center company, MphasiS BFL Ltd., said in an interview at the three-day annual meeting of Nasscom, India's software industry trade association last week.

MphasiS, based in Bombay, has 6,000 employees, and its operations are spread across the cities of Bangalore and Pune. More recently, it has expanded to Shanghai, China and Tijuana, Mexico.

Companies such as MphasiS are the biggest beneficiaries of a movement among many of the largest corporations in the United States to shift certain white-collar work to low-cost India, where local companies are adding thousands of skilled, English-speaking employees every quarter to meet the increased demand. At the same time, companies such as General Electric and Microsoft Corp. are expanding their operations in India on everything from basic customer service to high-end research and development.

The political reaction in the United States against such outsourcing has built rapidly in the last year; nearly two dozen states have voted on legislation to ban government work from being contracted to non-Americans.

More recently, the Senate approved a bill aimed at restricting outsourcing of contracts from two federal departments. The House has not acted on similar legislation.

"We are concerned that this is federal legislation and that it is sponsored by a Republican," said Kiran Karnik, president of the software association. "Republicans are traditionally free-marketers."

Karnik, who has been vocal in promoting the cost-saving advantages of India's workforce, said he was perturbed that "all of the election-year rhetoric equates offshoring with job losses."

More than 70 percent of India's software export revenue comes from companies based in the United States, but less than 2 percent of India's export earnings comes from work for American governments, and the software and related service industries account for only 3 percent of India's economic output.

Still, the industry is increasingly associated with the Indian economy's upbeat mood, and its leaders are anxious. As fears of American white-collar job losses continue to rise, they say, the issue is expected to become a sticking point in trade negotiations between India and the United States.

Gartner, a technology research firm, predicts that the outsourcing reaction will continue to escalate at least through the fall.

"The aggressive campaign against moving work to low-cost destinations will become a political imperative for the presidential campaign," said Partha Iyengar, a Gartner vice president for research who is based in Bombay.

American corporate customers of Indian software companies were not conspicuous at this year's annual meeting. Corporations in the United States, and the Indian companies they contract with, kept a low profile.

However, Cognizant Technology Solutions, a company based in Teaneck, N.J., has 70 percent of its development operations in India and said it was still seeing five to eight customers and prospective clients from the United States every week at its offices in Chennai in southern India.

In a further indication that outsourcing is likely to be an increasingly touchy subject here, Robert Blake, the U.S. charge d'affaires in New Delhi, said last week that India's best response was to open its markets wider to help create other jobs in the United States.

Blake's remarks rankled India's government. "That is not the way to go," said Yashwant Sinha, the external affairs minister. "It smacks of retaliation that 'if you don't open up, we will impose restrictions,' " Sinha told reporters last week.

"The U.S. has to realize that by outsourcing, its companies remain competitive and save jobs," Sinha said.

[Lael]

"We are concerned that this is federal legislation and that it is sponsored by a Republican," said Kiran Karnik, president of the software association. "Republicans are traditionally free-marketers."

Even REPUBLICANS know this has the potential to overturn the Governing structure here.

Look, National Security is Bush's forte`, Homeland Security [defined as being able to pay the MORTGAGE!! ] is the DEMOCRATS!!!

[Lael]

"We need public disclosure of companies outsourcing and the number of jobs that are sent overseas."

I notice that virtually everyone in Wintel Space is Outsourcing.

But NOT Apple or Pixar!!!

OK, folks, keep buying yourselves OUT OF A JOB!!!

[lelio]

Why do they not let in Harley Davidson Motorcycles to compete with the brands manufactured in China because they do not do it.

They're probably working on their Chevy QQ like knock off of the Harleys.

[ninenot]

Already done. Chevrolet, Jeep and Briggs & Stratton have all seen knockoffs in the marketplace, WAY under-selling the real stuff.

PRC even duplicated the Briggs/Stratton name-and-serial-number plates.

[ninenot]

Ol' Crony doesn't want to explain too much.

He's a bit evasive about exactly for whom he's trolling here--see a few posts above.

It's either India or PRC--or maybe the Republican National Committee.

[ninenot]

Cronos, the troll, now wants us to believe that PRC slave-laborers will buy American-made cars (which one? Intrepid? Vette? Taurus)--shipped over to PRC, on your basic $0.27/hour income.

MILLIONS of them in the next 5 years.

Crony also has invented a Chinese Middle Class (what's that? $0.75/hour???) forgetting that the real middle class in China is either: 1) relatives of current PRC bigwigs; or 2) Triad bosses.

I don't think one should waste too much time with him.

[XBob]

73- where are youall getting this crap from:

"As to the Big Three: they made a BIG SHOW of telling us that PRC would allow them to import 250,000 cars from US to PRC in 2004. 250,000. Wow. US market is 18 million cars/trucks. Yeah. Toothpaste and soap will redound to the HUGE benefit of US workers....
Ok, the PRC buys 250,000 cars from us in 2004. How many did they buy from us in 2000? 1000? 2000? That's phenomenal growth.
By 2010, they'll buy millions of cars from us. See the big picture, the long term view."

===
http://www.bizasia.com/trade_/gnnkx/us_auto_companies_eye_china.htm

Last year, the total Chinese market for vehicles was 1.8 million units, with only 20,000 units being imported. This is the result of an import tariff that is as high as 100% on completely built vehicles. Under the WTO agreement the tariff will fall to 25% in six years, which the US industry views as quite fair.

[XBob]

68- So, I impoverished country (india) learned to compete against another impoveirshed country (china) - where wages and standards of living are similar. So what?

Those are equals competing on a level playing field, and it works.

[XBob]

120-"A car a year? Highly unlikely. Even the Saudis have slowed down on their profligacy. Anyways, all 12 million will be built in China, no matter the name badge on the hood, because their Government has said so. So much for your fabulous Chinese Market. All you have instead created is the Chinese Manufacturing Collossus...with Western technology and industrial product and manufacturing design handed to them on a silver platter."

boy you can say that again. people who think of china as a vast market are fools. what they are is a vast and unscrupulos competitor.

[A. Pole]

If only Putin hadn't gone totalitarian, I would have considered expatriating to Russia

Putin is not totalitarian. He is really very popular, partially because he allowed prosecution of same "reform minded oligarchs" - ie mafia related big crooks and primarily because he is a very hard working leader who tries to fix economy.

[hedgetrimmer]

No they are not on equal footing. China has the laogai, slave labor camps remember? About 8 million workers work for free.

[Lazamataz]

But what the US corporations are availing themselves of is something which is the opposite of real free trade and actual capitalism. They are making use of an India government designed surplus of programmers. They are arbing the difference between US and Indian wages and standards of living. The fact this can be done is enabled by a whole series by govt import/export supports, host country labor policies, investment subsidies, tax laws. This is what the Carly Fiorina oddly calls free trade. Normally business flows would push the Indian technical wage nearer to world levels but this is not happening. US companies create something called captive facilities in which the local offshore employees are kept carefully isolated from world price levels.

Can you get me some source materials or documentation of this? This sort of stuff needs to be exposed.

[Outsourcing=Competition]

Putin's a totalitarian ruler who has crushed dissident political parties. Don't forget he's a former KGB goon who probably misses the days back in the ole' USSR when one man called the shots.

[Outsourcing=Competition]

German cars aren't sold here in any great numbers, unless you count Chrysler as German.

[Outsourcing=Competition]

That's actually a very misunderstood notion. The USA did not "get rich" in that period by assessing tariffs on imports -- it got rich by

Taking advantage of an "accident of history" (the settlement of the frontier) that allowed us to secure land and resources at costs far below what First World nations would have had to pay.

The 1930s also happened to be the first time in history that the average American had a standard of living that exceeded the standard of living of someone living in advanced European countries like Britain and Germany. the average American had a lower standard of living than the
average resident of these countries well into the 20th century. In fact, the U.S. was still looked upon as an agrarian nation almost until the time of World War II.

Tariffs would ruin us and reduce us to the way we were in the 1700s. It smacks of recedevism, protectionism like the commies do in North Korea or Russia.

[stig]

Siemens is a German company. So, they outsourced to us and now are sending it elsewhere. hmmm... shouldn't the Germans be the ones complaining?

Siemens has made pruchases of American companies. The model they have used is a symbiotic one. They have raised their presence in the American market to sell their goods and to produce goods bound for the US that are cheaper to make here due to shipping costs.

If our corporations were only setting up an Indian presence to better service the Indian market there would be no complaining and Free-Trade would reign.

[Euro-American Scum]

I have not yet had a single encounter with an offshore tech support that I'd rate as good as even a medicore American operation.

After reloading all software three times at the behest of the Dell pros from Bangalore, it was a tech rep. in Tennessee who had the bright idea to run hardware diagnostics on my Dell 4300 that revealed a failure on my hard drive.

Not to worry. Dell sent out one of their crack Indian H1-B hardware reps to install and genuine reconditioned hard drive that I fully expect to fall apart in another three weeks.

And the good thing about all this is I'm learning to build my own PC from the motherboard up. High time too. I'll do that before I ever buy another Dell.

[ezo4]

I will be changing banks this week and Ill let them know why. If anyone here starts a ping list on outsourcing companies. Include me in. I will not use them anymore. No money from me - only to companies that employ us. EOD

[1rudeboy]

BMW manufacutures ONLY their SUV line in the USA.

False. BMW makes the Z3, Z3 Coupé, M Coupé, and X5 in Spartanburg. If you cannot get that simple fact correct, how can you profess to have an opinion on the subject?

[1rudeboy]

German cars aren't sold here in any great numbers, unless you count Chrysler as German.

But BMW Spartanburg exports almost half of its product, so what's your point?