Posted in Technology Talk

The Outsourcing storm ..

obama oscar pic

Last week, there was a furore in India over the US President Barack Obama’s perceived anti-Bangalore-outsourcing statements at a meeting to discuss  US tax policies in the White House. The President was speaking about International Tax Reform, and mentioned flaws in US tax policies that favour companies outsourcing jobs over those that don’t.

Reactions to his statements and tremors were felt everywhere –at home, on TV, in the front page of the daily newspaper and in coffee time chats in office. There was outrage in various sections of the media, with everyone proclaiming “Obama is at it again!”, and criticism of the US president’s anti outsourcing  Obama-isms. The NASSCOM issued a statement that the Indian IT industry is doing quite good, and there is no danger from the newly proposed tax policies of the US.  All this brouhaha piqued my curiosity, and I was inspired to a bit of research on my own.

Agreed, these are competitive times, and everyone wants to be at the top of the pyramid. Yet, we have to acknowledge that Obama has an axe to grind against the outsourcing industry, especially when US is in the midst of the recession. Americans are losing jobs in millions, to be exact – their economy lost another 539,000 jobs in the month of April. So, he is just doing his job. Also, the tirade is not against Bangalore, but an expression of frustration towards a phenomena which has cost thousands of Americans their jobs and livelihoods.

In the last fifty years, there has been a radical shift from the old “Manufacturing Based” economy, to a new “Information Based” economy. The major force of a company is now intangible assets like knowledge, intellect, creativity and brain power.. “…In an information-based economy, it is this human capital and knowledge that creates worth for the firm.”  There is a relentless pursuit to hire and sustain employees which are of high technical value and a level of completion which the industry has never seen before. Under these circumstances, off shoring jobs to skilled personnel in foreign nations seemed to be the obvious choice for many of them. It is all the more relevant at a time when companies are scuttling to aggressively cut costs and boost profits.

However, off shoring is not the crux of all White house economic woes. And coming back to Obama’s original statement about Bangalore, we have a lot to infer from it. I read the text of his statement, and he is talking about the flaws in the tax policies of his country –“… it’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.” The mention of “Bangalore”  here is not just alliteration, but is symbolic of India’s coming of age in the global economy, and how it is beginning to be perceived as a threat to a Global superpower – both in terms of human resource and technology. We have indeed come a long way – though we still have a long way to go!

Life is like that, and someone’s loss is someone else’s gain. However, we have precious lessons to learn from this. If the world is flat, then it is flat for everyone. So its very easy for fortunes to change – if the opportunities are there for you, there they are there for everyone else too!.. You have to be competitive or critical, differentiate or die – and this is what will give us the edge in the future. We might be competitive under the current circumstances, but we need to move towards becoming critical in terms of ideas, technology, competency and resources.  And the pace at which things are moving, we need to evolve fast!  We need to breed our own Yahoo!s and Googles – because in this laissez-faire and unforgiving economy, the only exclusive competitive advantage you can have  is a brilliant and original idea!!

A link to the President’s address is here:

http://www.whitehouse.gov/the_press_office/Remarks-By-The-President-On-International-Tax-Policy-Reform/

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