Outsourcing: Good for both sides
ND Batra The Statesman Asia News Network Calcutta
I once said jokingly to Raymond Jennett, principal in a small accounting firm who prepares my annual income tax returns, "I hope you're not sending my income tax papers to some outsourcing outfit in India." I was expecting a loud guffaw in response but he took my remark seriously and promptly assured me that he would do the returns himself, though, he said, his firm has been approached for accounting and audit work to be outsourced to India at very reasonable rates.
I wasn't surprised. I know Indian CAs undergo as much rigorous training as do their counterparts in the U.S.; and I don't see any reason why in the course of time there should not be an increased sharing of knowledge-based work in financial and accounting area as well, as political, business and institutional trust between the two countries increases.
Work is being outsourced to India not only because its highly educated workers render it at a quarter of U.S. wages, but more so because of the growing trust between the two countries. The comparative openness and transparency of India, strengthened by the shared common language, English, and the presence of highly motivated Indian community, most of them well-paid professionals, in the U.S., breeds confidence that Indians can not only do the job well but more importantly they can be trusted with confidential matters.
Outsourcing is manifestation of globalization, which is "an irreversible trend," according to Vijay Govindarajan, Earl C Daum Professor of International Business at Dartmouth's Tuck School of Business. Debunking the myth of job loss, Govindarajan said, "A job that goes from the U.S. to India or China... to argue that is one job less in the U.S. misses the point. When a job goes to India... (it) means two things are happening. One, the company's profits are going up. When the company's profits are going up, they are able to redeploy them in other places, so you're able to create more jobs in the U.S. The second thing that's happened is that the Indian who's given a job now has disposable income. That means the market in India is growing. Therefore, the multinational is able to sell more of its products into India. So if you take aggregate U.S. economy, these kinds of open borders have actually benefited the economy."
A recent Bloomberg report supports Govindarajan's views. Delta Air Lines Inc., for example, set up 1,000 call centers in India, which helped the company to save US$25 million in 2003. This enabled it to add 1,200 jobs for reservations and sales agents in the U.S. Companies that have created jobs in India recently include General Electric Co., Oracle Corp. and Hewlett-Packard.
The Bloomberg report quoted GE spokesman Peter Stack saying that outsourcing has enabled the company to add "to the quality of jobs in the U.S., and we've done that by investing heavily in high-quality, high-technology jobs... When we sell effectively to international markets, it grows our business, and that benefits our workers here."
Interestingly enough, not a single corporate executive or economist has said categorically that outsourcing is bad for the U.S. On the contrary they have been vociferous in their views that any attempt by the government to reverse the outsourcing trend under pressure from popular press and populist politicians in the election year would make the economy globally less competitive. The damage might become irreversible if the trend for finding the best brains for doing business is halted.
When Democratic presidential candidates shed crocodile tears over jobs lost due to recession and not being re-generated speedily enough even though the economy is on the upswing, and blame Bush for it, they show their ignorance about how the digital world is changing the meaning of work and where it should be done.
Does India have to worry about a backlash? Not really. But consider this. In the last week's episode of West Wing, weekly nighttime serial drama about how the White House works, China is threatened if it didn't open its market to U.S. cars, for the U.S. would retaliate by imposing high tariff on the import of Chinese bras. Bras for cars! Well, the fictional occupant of the White House, President Josiah Bartlett, is a Democrat, but I hope that's not how Bush works.
In any case, if Bangalore, the city on a shining hill that has become an icon of a resurgent India, proclaims, "If you have a problem, America, we have a solution and we can do better and more efficiently," the election-generated partisan noise against job outsourcing to India would have minimal impact.
The writer is Professor of Communications, Norwich University, Vermont.