By Dr Ashwani Mahajan
Though recession has taken the whole world into its grip but US and European countries are worst affected by the same. Many of US banks, other financial institutions and even their star corporates like General Motors are lying flat on the ground. Jobs of Americans are vanishing. According to a rough estimate between November 2008 and February 2009, in just four months about 3 million jobs were lost in USA. Similar position is there in Australia, Canada and countries of European Union (EU).
People in these countries, though understand that this sudden impact on jobs is due to recession, but still they consider the ongoing outsourcing of jobs to foreign countries including India and large scale migration of Indians into their respective countries for their miseries.
When a company gets a part of its work done from same outside agency, it is called outsourcing of services, i.e. sourcing from outside the company. When such outsourcing is done from within the country, then theoretically there is no impact on employment opportunities in the country. For example, it Railways outsource its reservation and other services from IRCTC or some other agency, then jobs in Railways get reduced but at the same time jobs are created elsewhere, within the country. Economic principle behind outsourcing is, that it helps the concerned company or undertaking to concentrate on its care competence. It not only helps in reducing cost but also improve efficiency in many ways.
But if a company get its work outsourced from outside the country, this has a different type of impact. This kind of outsourcing causes a reduction in employment opportunities in the country. Today USA gets its professional/business related work outsourced to Business Processing Offices (BPOs), and call centres, legal service providers outsource their professional work to legal processing offices (LPOs), knowledge related work to knowledge processing offices (KPOs) and medical related jobs to medical transcription services providers and many other jobs are being outsourced from abroad.
Thus the jobs which could have been accomplished by people of US, Europe, Australia, and Canada etc are being outsourced abroad. Outsourcing is being practiced by companies to reduce their costs. IT giants like IBM and Microsoft get their software made from India and even in their own countries' offices they employ mostly Indians. US government has been easing visa rules to smoothen the entry of Indians to facilitate their companies.
In the last decade outsourcing business has been growing at a rate of more than 40 percent per annum. We understand that performance of a company is judged by the profits earned by the same. If a company incurs losses continuously even its existence may be endangered in the long run. Thus may it be lure for maximizing profits or struggle of its survival in the competition, American companies are driven to outsourcing from abroad.
In the election campaign for US president the issue of outsourcing was at the core. During the campaign Barak Obama outrightly took a position against outsourcing and promised to stop outsourcing.
After the elections Obama was facing a dual challenge of receding US economy and consequently vanishing job opportunities on the one hand and banning of outsourcing (for better job prospects for Americans) to fulfill its poll promise on another. Earlier Bush administration had already banned outsourcing by government departments. Barak Obama after taking over the reign of power ordered for making visa rules more stringent. Recently his administration made a legislation effecting withdrawal of tax benefits from companies indulging in outsourcing.
US companies have waged an open war against the Obama administration's new legislation. Companies openly level charge Obama for working against their economic interest and economic interests of USA. Since companies cannot do away with outsourcing, withdrawal of tax concessions can cause heavy damage to their interests .Thus opposition of new legislation by US companies is obvious.
So far US government willingly or unwillingly, knowingly or unknowingly has been facilitating outsourcing and migration of Indians . May it be recession or struggle for survival, people in US and other developed countries are rising against their own companies for indulgence in excessive outsourcing. In some countries we find racial attacks on Indians. Perhaps they think that they may be able to ensure jobs for themselves by sending back Indians or by banning outsourcing.
Those who oppose outsourcing or are opposing migration of Indians in their respective countries must understand that outsourcing is not a grace given to Indians. Outsourcing is being practiced due to low wages and the capacity of India and Indians to provide services at low cost. For a job accomplished by an Indian youth working in Indian call centre for a meager sun of ten to twenty thousand rupees per month, an American company may have to pay 2 lakhs per month in USA. Cost efficiency is the business mantra today. High cost US economy perhaps is not competitive enough to face the challenge of low cost India economy. Compulsion to reduce cost perhaps compels US companies to make inroads to India.
Costs in US and European countries are much higher in provision of medical, business or even civil services as compared to India. Cost reduction through outsourcing is a reality today, thanks to technological advancements. Obama and others who oppose outsourcing must realise the compulsion of US companies.
Today an American spends about 30 times more as compared to an Indian on an average. Universe is fast becoming a global village. National boundaries are vanishing. Such a large gap between US citizens and Indian citizens cannot be sustained. American people must change their life styles of high consumption, wastage of resources and luxurious life style. They must reduce their costs to survive in this competitive world to get rid of the evil of outsourcing.
