Why Barack Obama cannot cut outsourcing

The recent economic depression in America gave jerks and jolts to all major economies of the world. After India and parts of the UK, Germany and Japan also entered the league of losers. The ripples traveled far and wide on the world map.

All the economies of the world are interdependent. Let us take note of the India’s economic connection with America- the Indian economy is more closely related to the American economy than its counterparts. The Bush-Manmohan regime witnessed healthy relations between the two countries which were conducive for inter-flow of various industries and services, including outsourcing.

Outsourcing of services to American firms by Indian ones turns out to be quite a good deal for the Americans, because of two reasons- one, easily available semi-skilled workforce in India; two, reasonable wages. Thus, the rapid outflow of services led the NCR regions of Noida and Gurgaon to become hubs of BPO and KPO companies, which now employ thousands of Indian semi-skilled youth.

However, during the Democratic Party conventions, Presidential candidate Barack Obama had announced that outsourcing to India is adversely affecting America. He promised to cut this outsourcing if elected to White House. As a matter of fact, unemployment rate in USA touched a 20-year high at 14% last quarter. His statement led the Indian BPO industry into a state of shock; the fate of a large population of youth who are completely dependant on call centers faced a question mark.

However, it now turns out that Barack Obama can’t take drastic steps until his domestic economy comes back to an optimum level again. Although it is supposed to be improving, it is still not out of the deep side of the pool, and will definitely take time to cope up with the crisis. Even if their government decides to cut outsourcing and get back jobs, how will the companies which are finding it difficult even to pay basic wages to their current employees bear the burden of additional workforce at relatively higher wages? On the contrary, companies from the States will now outsource more jobs to India to cut on expenditure for surviving.

A recent report in The Times of India confirms this contrarian belief. In the Banking sector, India’s largest public sector bank State Bank of India will hire 25,000 new hands. Bank of India and Metlife Insurance will recruit 10,000 and 32,000 employees, respectively, while Accenture is set to hire 10,000 employees.

Infotech giant TCS is set to hire 30,000-35,000 people this year, and Infosys is sticking to its plan of hiring 25,000 people this fiscal. L&T Corporation Ltd. will hire 10,000 people in the next 3 years. Aegis BPO will add 1,000 people every month this fiscal.

This generation of new jobs in our economy is an indicator of the good times to come- it is the silver lining, indeed! Quite ironically, what initially appeared to be a nightmare is actually a blessing in disguise.
Shobhit Garg

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