Information about the Effects of Outsourcing

In our previous article we reported how various companies in India were employed by the Republican National Committee and the Bush Re-election campaign (see: India claims big election victory and laughs at Americans).

One interesting comment that was documented in that article was:

As Vivek Paul, Wipro VC, said after the Presidential poll, “The elections are over and so is the rhetoric; it will be easier for American corporations to step out with their outsourcing plans.”

Well a little research has found some estimates from within India about what that meant. First and foremost, it means that India is celebrating the "loss of American jobs." Folks, that is the jobs of friends, family or perhaps even your own.

Specifically on November 4, with time zone changes, roughly a day after the polls close the following was published in the India Times:

The industry is quietly celebrating that outsourcing and loss of American jobs will not be the hot-button issues any more.

And that is why they believe that "it will be easier for American corporations to step out with their outsourcing plans." Does this mean that American companies put their plans on "hold" to minimize the impact on a close election?

But the folks in India gloat a little more:

Of the documented jobs that left the US for other countries in January through March 2004, 23,396 went to Mexico, 8,283 to China, 3,895 to India, 4,419 to other Asian countries, 5,511 to Latin American countries other than Mexico and 2,933 to other countries.

A brief look at these numbers show what they call a documented American job loss of 48,237 for the first quarter of 2004. On an annual basis this would be 192,968 American jobs. And they expect American companies to now - step out - with their outsourcing plans.

Some will say that 192,968 jobs is not very many. But as you will see in coming articles that is just what is called BPO and is not the whole picture.

Lets look at the effect of three policies that affect American jobs:

1. Outsourcing - In this article it has been shown that it is at least close to 200,00 jobs a year for the BPO segment and expected to increase
2. H1-B visa program - allows high tech foreigners to take American jobs here without being counted in immigration totals. Used by many companies to train personnel for their foreign outsourcing programs. There are roughly a million H1-B visas active today.
3. Legal immigration of about 1 million a year and illegal immigration of about 3 million a year resulting in lower American wages and increased social costs.

Ladies and gentlemen, you are paying the salaries of the elected and appointed officials who are doing this to you. Is this what you want to pay for? If so, why are you reading material on this web site?

If not, you are being ignored!

It should be obvious to all that this trend can not continue forever. Are there any signs that it is getting better:

A recent study of A T Kearney shows that nine out of 10 chief executives wanted to outsource to India. 25 % of the respondents wanted IT and auto component work to be given to India, 15 % favoured China and 13 % Mexico.

That should answer that question beyond a reasonable doubt. Interesting that 15% of the outsourcing chief executives favor Red China! Remember these are the folks that make the big campaign contributions that have so much influence on many of your elected officials. How will you feel when YOUR job is sent to Red China?

If you do not agree with these policies you are being ignored and your elected officials are representing special interests more than you! If you believe that this is a serious problem it is time to get involved now. The longer you wait, the harder it will be stop these destructive trends.

The BPO and your elected officials are doing offshore calculus, are you?

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BPO biggies do offshore calculus TIMES NEWS NETWORK[ THURSDAY, NOVEMBER 04, 2004 02:13:09 PM] India’s silicon valley is delighted to move out of the limelight. The industry is quietly celebrating that outsourcing and loss of American jobs will not be the hot-button issues any more. BPO bigwigs are already computing the gains from mega-offshoring plans on hold waiting for US presidential race to be over. Though most of the industry majors refuse to comment on who will safeguard their interests better, they feel that economic benefits of transfer of jobs to low cost destinations will now overshadow the political rhetoric against outsourcing in the run up to the US poll. The US presidential election was fueling the protests against job losses due to transfer of jobs. “American law will remain the same and the outsourcing will go up irrespective of who wins. Already, we see our clients getting ready for bigger offshoring plans,’’ says head of a leading Delhi-based BPO firm. Insiders also feel the American clients might be more open to talk about their outsourcing plans to low-cost destinations like India now. Though Kerry’s tax proposals that seek to end tax breaks for companies that ship jobs overseas could deter fence-sitter, analysts feel they are no more than short-term sentiment dampeners. After initially branding the shipping of jobs to countries like India and China as a threat to the US economy, Kerry has gone on record saying he can’t stop outsourcing. Clearly, what is of greater concern is that a clear decision comes soon, irrespective of whether it favours Bush or Kerry. Though Bush is more popular, the $ 2.6 billion BPO industry is convinced that “it will soon be difficult to differentiate between Democrats and Republicans. Obviously sector’s fate is closely tied up with the US elections, with US accounting for over 70 % of India’s IT exports. A recent study of A T Kearney shows that nine out of 10 chief executives wanted to outsource to India. 25 % of the respondents wanted IT and auto component work to be given to India, 15 % favoured China and 13 % Mexico. Of the documented jobs that left the US for other countries in January through March 2004, 23,396 went to Mexico, 8,283 to China, 3,895 to India, 4,419 to other Asian countries, 5,511 to Latin American countries other than Mexico and 2,933 to other countries.

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