A phone rings in an obscure Indian metro, Amit picks it up.
“Good Morning, Mark, this is Amit speaking.”
A mundane pick up line from a chrome polished state-of-art IT office where thousands of Indian professionals replaces the rolling ascents of their respective American counterpart. Integrating hundreds of disparate applications, facilitating data flow, customizing workflows, deconstructing and remodeling platforms, and in return America capitalizes on cheap labor, and saves in millions. The job goes to India, and the money flows to the shareholders. But, then,
Why is Mr. Barack Obama crying hoarse over outsourcing? What is he playing with, and is not stating, when he says, “Stop Outsourcing!”?
Earlier this month, Mr. Prez had raised his pitch and made it clear that protectionism is the agenda and he intends to push this and propel companies to invest in the US, and subsequently opening up fresh avenues for jobs. Long term growth through a robust and sustainable model is one of the basic pillars of economics. How can the President overlook this? Or is he just trying to usher in show business, and cheap politics to woo the masses, and manipulate statistics for a short term glory?
An average Indian software professional gets billed at 20USD/hour, while his American counterpart receives 80USD/hour. Considering both of them does the same volume of work, simply based on resource cost effectiveness, 4 Indians equates one American. The current flagship program embraced by the Democratic clearly doesn’t place him in the best interests of the state, and considering the long term growth story, the protectionist’s stance is definitely not sustainable, in this age of globalization.
Unfortunately in this media frenzy, let us not focus on the myths and misconceptions on protectionist views. Here is what Mr. Prez doesn’t say when he cries foul.
Firstly, when an industrialized widens its scope of economic interaction with a developing/poor country, the potential for profit is maximized. Contrary to the effect that doesn’t meet the eye, if jobs lost due to outsourcing were protected through trade restrictions, there could be more workers in the state, but lesser jobs on the whole. The simple reason behind it since, outsourcing reduces, operating costs of users and businesses, encouraging, more investments and capital inflows into newer products and industries, thus creating a much wider crater of jobs, which in turn pushes the economy and restricts stagnancy of the industrialization and cultural growth of a nation.
Secondly, when the business benefits from the cheap labor costs, it increases productivity and competiveness, in the internal trade where change is as fast as the rising sun. It boosts excellent fiscal management and the organization remains cost effective and dynamic.
Thirdly, if statistics are to be believed then, only 19.5% of the jobs in the US are being outsourced, while the number of jobs created everyday in the US is far higher than the jobs that are being lost due to outsourcing.
Fourthly, free trade interaction encourages foreign investment and capital inflows, thus increasing a world output, superior technology, and further a maximized balance sheet, will usher domestic investments. Creating a healthy competition among domestic industries, with the international marketplace, in the backdrop, the business can have wider access to dynamic resources pool and the pros and cons of an ever increasing unforgiving market.
A glaring example is when Japan started its economic revolution, expanding its automobile industries to countries like the US and the Europe with a much higher consumption rate in the late 80’s and early 90’s, the US per capita income was 23,200USD while Japan’s was 20,300USD. It seemed that Japan would catch up and fast overtake the US. But after a decade of long free trades with lesser restrictions and increased outsourcing, the 2002 facts shows that the US had raced ahead of Japan. The standings were thus: US had up-ed its per capita income to a staggering 35,100USD while Japan lingered back at 26,000 USD.
So when Obama tries and play the patriotic trump card by handicapping the nation of entrepreneurship and free trade by hiring in more expensive domestic labor, he’s just giving death sentences to the American trade and its spirit.
His presidential victory speech seems far off today, than it has looked ever.
“The road ahead will be long. Our climb will be steep. We may not get there in one year or even one term, but America – I have never been more hopeful than I am tonight that we will get there. I promise you – we as a people will get there.”
These were the lines that caught my imagination, but all I can foresee, that this protectionists agenda, can just be another step taken in the run up to the November Polls. Obama’s views seem to be a just a distant reflection of what it was. Show casing run-of-the-mills agendas and clichéd democratic beliefs will not re-make America, that you one day spoke of, giving hope to millions of fellow Americans.