American IT outsourcing
Obama says ‘change’, could be a change from Bush-policy. Bush encouraged outsourcing and deregulation. Obama could do the opposite? The Obama decision maybe fuelled by the degrading economy. Indian IT industry is already feeling the pain. While it used to be a one-in-million decision to layoff somebody in India, now it’s a common scene in US-based companies in India. Other IT outsourced countries like China, Vietnam, Indonesia, etc are feeling the pain too. China has started to spend in Europe for some good-will sake, that’s a different story anyway.
In his first address to the joint session of the US Congress, Obama: “We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.”
This could very much hurt those US companies which are heavily outsourcing (mainly for IT).
From a major Indian IT firm: “The US is a very open economy and a strong proponent of free trade globally. We are confident the US will not take any measure, which might hurt its global competitiveness. Policies of protectionism would only hinder the revival of the world economy. We feel that in the current economic environment it is imperative for global corporations to collaborate on technology and innovation.”
This Indian jargaon is a bit beyond US understanding.
India on Thursday indicated that the US move against outsourcing may be contested in the World Trade Organisation, stating New Delhi will take up the issue with Washington.
India: “We have to ensure what they (US) are doing is WTO compatible when we are talking about trade, movement of goods, movement of people and movement of services.”
Conservative American lobbyists are already towards cutting down outsourcing and laying off aliens (visa holders) first before American citizens. This is being received with a very strong criticism, from world and as well by the US IT companies like IBM, HP, Microsoft, Intel and Indian IT like Infosys, TCS, Wipro, Satyam, HCL, etc.
Every month, US employers are laying off half a millions people and the total unemployed has already crossed 5 million. The unemployment rate is already 7.5% and states like California and Michigan are doing the worst. It’s time for the US government and those who run it indirectly (security agencies, pentagon, etc) to devise a strategy about how to deal with the growing unemployment and the outsourcing. There is no one-stop-shop solution, it needs proper planning. A complete cut from outsourcing is not advisable but at the same time doing nothing about curtailing it is also not good for American economy and ultimately the world as whole.
Unfortunately, the practical truth is that ‘America is World. American sneezes and World catches cold but not the vice versa’. So, the world (including outsourcing beneficery countries) need to understand that pulling US at different world meetings like WTO is not going to help them - you don’t kill the goose who lays you golden eggs.
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