For a long time America has been at the other end of the stick especially for countries like Brazil and India in trade. Some of the WTO/GATT regulations are anti developing nations that thrive on agriculture. Each country has a right to propose rules and regulations that would ensure some protection to its primary industry and see to it that its welfare is at the forefront of its policies. Countries like Brazil and India have been putting up a fight in a meaningful way against some of the WTO regulations that are pro developed countries. In spite of being smaller nations (far less developed too) these countries have not gone to the extent of banning Americans or American products in their respective countries. Why then does America today raise a hue and cry being at the other end of the stick when a couple of thousand jobs have left their shores and landed up in India?
The reasons are completely different than what is being made out to be true. In fact the number of jobs in the ITES (Information Technology Enables Services) sector in India are less than a million. We can safely assume that 60% of these would be for American companies. America was the front runner in promoting free trade and globalization amongst nations and today when it comes to losing a few thousand jobs it has become inward looking. America fails to recognize the fact that these jobs are being lost to meritorious and more efficient workers in India. And the only way to fight it would be to look at newer ways of improving productivity and making their operations effective. If at all there are job losses that really impact the Americans these are not really jobs in the ITES sector but jobs that are in the other sectors like manufacturing and domestic services sector. These jobs are being lost to China and Mexico and not to India. The faster policy makers understand this problem the better it is for the world as a whole and the CEO’s of these corporations in specific. Imagine Bill Gates being asked to keep away from India where Microsoft can get same or better skill sets for research and development at one third the cost.
India is not just purely cost effective but also provides a wide variety of talent that is readily available for deployment. America should look at its education system and see how many capable and industry deployable graduates it produces. The last part i.e. “industry deployable” is essential, you may be a great academic, but if you cannot work in a team, perform as a leader of men, then you may not be welcome outside the world of academics. The question to be asked is how focused are the universities to create this kind of environment where they reap a rich harvest of “industry deployable” graduates. The other factor that demonstrates that it is not just the cost that drives outsourcing is the fact that better folks are available to do the same job in India. Just look at the figures available on salary hikes in Indian IT sector. The salaries have gone up at least 20% year on year since the last 5 years i.e. the costs on salaries have doubled on a per employee basis. Indian companies are still getting business from their American customers in spite of passing on this cost back to the customer. Why would your customers come back to you if you just bill them higher with out giving additional value in the service that you provide. Customers have come back and a vast majority of them are giving repeat business to their existing vendors.
The perceived threat of outsourcing though is just temporary, because as has been demonstrated the vast middle class and upper middle class that has been created in India for example is in turn a big market for western products. This is going to stir up the economies in the west (read America). So a few thousand jobs lost now may be just a temporary phenomenon and a sign of better things to come in the near future. Also America should look at the hordes of illegal immigrants coming in to the country and working for them. A part of the problem could lie there.