Saturday, March 01, 2008

US: We have to live with outsourcing

Source : Click here

With elections race for the US Presidential elections getting fiercer with each passing day, the battle seems to be getting murkier. The US presidential candidate -- Barrack Obama -- has raked up the issue of outsourcing to cash in on the electorate's sentiments.

At a rally in Ohio couple of days back, Barrack Obama told his voters that their jobs have been taken away by offshore companies set up in places like India and China.

"We're here because there are workers in Youngstown, Ohio, who've watched job after job after job disappear because of bad trade deals. They need us to end those tax breaks that go to companies that ship jobs overseas, said Barrack Obama.

Mario Mancuso, US Under-Secretary for Commerce, however, felt that outsourcing is a part of the globalisation process. "It is very important for the US to come to grips with the opportunities and challenges of globalisation. US continues to invest in India and Indian investment has been critical to the US and so we are open to the world and we are open to India," Mario said.

However, this is not the first time that outsourcing issue has been raised. John Kerry, another democratic candidate had made similar comments in the last election, after all, politicians have to use any means to appeal to their voters, and Barak Obama, is after all, a politician.

Indian BPO units unruffled by US presidential hopefuls' stance on outsourcing

Democrat hopefuls for the US presidential elections playing to the gallery are taking a tough stance on offshoring, promising US voters that their jobs will not be shipped overseas to save labour costs, but the Indian Business Process Outsourcing (BPO) industry is sanguine about such posturing and quite unfazed by these tentative policy pronounciations.

US Democratic candidate Barack Obama wooing blue-collared workers promised to do away with tax breaks for companies that oursourced jobs.

Hillary Clinton, wife of former president Bill Clinton making a bid for the White house herself from the Democrats' platform, had not taken a stance on the issue, but has now started toeing the hardline to win crucial votes in the contest for the Democrats' candidate for presidential election.

Meanwhile, the offshoring industry in India that offers cheap yet high-end labour and solutions for western firms is unfazed by the Democratic hopefuls playing the outsourcing card in the run up to the US presidential elections.

The BPO industy in India has the potential to reach $ US 50 billion by 2012 against the current business to the tune of $US 11 billion and would account for 2.5 percent of India's gross domestic product.

Both BPO unit brass and employees dismiss the candidates' stance as mere poll gimmicks and say that in a globalised era cost and supply chain management cannot be ignored.

"I don't think it will affect our business because basically the (western) companies will be looking at their profits, the bottonline and savings and obviously the benefits that will accrue to them, so it should not affect us. It is my opinion because ultimately it boils down to this because the (US) government might make policies to favour their people but basically its demand and supply games that the whole world is following and they (US firms gain advantage with better (profit) margins through outsourcing ," said Arun Babu, a BPO employee.

The US economy is currently reeling under the impact of the subprime scandal a arising out of mortgage loans for housing and there have been massive job cuts.

Democrat hopeful Barack Obama has blamed Indians for the rising unemployment in the US and if he has his way then thousands of BPO employees would be at the receiving end.

However, Indian BPO industry chiefs and managers argue that India is gifting jobs and not stealing them and believe that outsourcing is a win-win situation for both partners and it is not possible for the US to reverse policies.

"Because of the decision that is going to happen even if they are going to take it (the job outsourcing back the costs are going to be significantly increased and how are they going to take up their work by expanding on capital expenditure and increasing costs? Especially the health sector is the most expensive sector as of now in the US so they just cannot take back the offshoring of business. They have been getting a strategic advantage by outsourcing work to other countries and they can't afford to lose it. If American wants to operate across the globe then they have to continue outsourcing as in the absence of it they can't be a global leader," said Murli Krishnan, Director, Medtek.

The employees at BPOs are not affected by the US poll blitz and say that despite periodic gloom predictions, nothing has impacted the growth of the BPO industry that has expanded hugely in the last few years.

The Indian IT sector, a major offshoring component alone employs 700,000 people and is expected to provide direct employment to about 2 million by 2012.