Business, Economics and Jobs

India: Outsourcing at center of US election battle


India and the Philippines are among the countries which have benefited the most from US outsourcing.


Jes Aznar

NEW DELHI, India — The outsourcing of work to India and a handful of other countries is the most talked about loss of American jobs since Japan took over the auto industry in the 1980s. But how many, and what kind of jobs is it really costing US workers?

Both the Obama and the Romney campaign have tried to make outsourcing an election issue, demonizing Indian workers and promoting a kind of xenophobia that would be universally decried if it were directed at actual immigrants.

“... Companies that Romney invested in were dubbed outsourcing pioneers,” former Ohio Gov. Ted Strickland said recently, in a speech that drew attention here from newspapers like the Economic Times.

“Now, you know our nation was built by pioneers, pioneers who accepted untold risks in pursuit of freedom, not by pioneers seeking offshore profits at the expense of American workers here at home.”

Notably, an analysis of Joe Biden's speeches along the same lines concluded that he deserved “four Pinnochios” for fudging the facts, according to the Daily Caller. But never mind that.

Outsourcing is not happening because of tax breaks. Or because of some Scrooge figure at Bain Capital. It's happening because of very simple economics: Companies move work to places where labor is cheap. That's why your shoes say Made in China. And no matter what nonsense the two campaigns spout, it's not going to change one bit in November, as an Obama aide points out in another story getting heavy play here in India.

"It is important to recognize that insourcing, outsourcing, supply chain complexity, supply chain disaggregation, is here to stay," the Economic Times quoted Laura Tyson, former Clinton Administration Chair of the Council of Economic Advisors and now an economic policy advisor to the Obama Campaign, as saying on the sidelines of the DNC.

But don't try telling that to the man on the street.

On my visits to the US, I never fail to hear some story about a telephone conversation with a call center worker “someplace in India.” Jokes about help desk workers with “funny” accents and Americanized names regularly recur on the worst type of US sitcoms. And even Joe Biden — who captained a month-long attack on Romney's purported support for outsourcing in the lead-up to the Democratic National Convention — made an ill-thought attempt at a bastardized Indian accent back in January.

The truth about outsourcing is that the guys named Raj who little old ladies from Arkansas have trouble understanding are a pretty small piece of the pie. As more and more countries like the Philippines compete for a slice, Indian firms are increasingly moving up the value chain to take higher-end jobs from American workers. Meanwhile, outsourcing firms are also starting to create US jobs — just like the Japanese companies who whipped Ford and GM eventually moved production to the American South.

According to India's Mint newspaper, India's business process outsourcing sector, worth some $16 billion and accounting for 37 percent of the global BPO pie, is now focusing on high-end work, as the Philippines has already overtaken India in the “voice” segment and China is emerging as a serious competitor.

Meanwhile, Bloomberg BusinessWeek reports that countries like Argentina, Brazil and Poland, where wages are still substantially lower than they are in the US, are also competing for white-collar outsourcing work.

“Even Tata Consultancy Services (TCS) — India’s outsourcing leader, with estimated sales of $9.8 billion in 2011 — has 8,500 employees in South America, including Peru and Paraguay,” according to the magazine. “And Genpact (G), the subcontinent’s biggest business-process outsourcer, opened a finance and accounting center in São Paulo last year for UK drugmaker AstraZeneca (AZN).”

That means that your job could be in trouble these days not only if you're a telemarketer or a software designer, but also if you're an accountant, banker, X-ray technician, or even a lawyer.

In fact, with India's HCL Technologies announcing 10,000 new jobs in the US and Europe earlier this year, you might even be better off if you can do a little coding.