Indian outsourcers as “chop-shops”

September 13, 2010

The debate over outsourcing, H-1B visas and immigration has taken a particularly nasty turn recently when US Senator Charles “Chuck” Schumer referred to Infosys and other leading Indian blue-chip IT services and outsourcing firms as “chop-shops” (which are places where stolen cars are dismantled and their parts sold) during a debate about raising H-1B fees to pay for increased border protection. And while “chop shops” may be one of the few growth industries in Schumer’s home state of New York given its high taxes and the leaders of Indian’s US$60 billion IT industry are accustomed to such pop shots when unemployment rises in the USA, Schumer’s raw comments struck a nerve both within and outside the industry.

The Financial Express noted that Infosys had quickly released a statement saying that the firm’s strategy is to create jobs in every jurisdiction that they work in. In fact, today they have around 1,300 citizens and permanent residents working for them in the USA and they are working towards hiring another 1,000 employees.

Indian outsourcers as chop-shops
On the other hand, Aditya Birla Minacs CEO Deepak Patel simply said that it would be pointless to react to such statements since globalization is here to stay and if Indian IT services and outsourcing firms continue to deliver value for their clients, such statements won’t impact them and that Nasscom needs to continue to play a role in educating people about the industry.

Nevertheless, the Wall Street Journal pointed out that higher visa fees will discourage Indian firms from “insourcing” investment into the USA and that if the government makes it too expensive to seed a new office with foreign workers at the very beginning, they may not bother to open an office at all. This in turn would cut future employment opportunities for all Americans

Meanwhile, Business Week’s Bruce Einhorn pointed out in his Eye on Asia blog that Indian outsourcers are so unpopular now that they have managed to unite squabbling Democrats and Republicans into passing the bill on a unanimous vote. Nevertheless, it was the comments section of Bruce’s post that contained the best and most telling advice for both Indian and American politicians. These comments included:

  • American law makers should worry more about the math skills of American workers.
  • India should formalize their infrastructure and nuclear deals with European and Russian companies.
  • Start taxing American Corporations that sell products in India and shut down the operations of Ford, Apple and GM because they do not create jobs in India.
  • When the American government comes to India to lobby for deals, the Indian government should politely show them the door.
  • Its ironic that the Democrats are considering amnesty for close to 15 million illegal immigrants while trying to kick out some of the best talent in world.
  • Trade between the USA and India is fairly balanced with US$17 billion in US exports to India (mostly agricultural and industrial related products) and about US$21 billion in imports from India to the USA. This is in sharp contrast to the US$200 billion trade deficit with China – mostly in manufacturing
  • The number of jobs that can be created in manufacturing are 10-15 times that of the IT industry.

However and by far the best points came from one commentator who simply said that Americans should stop whining and get off their obese behinds and learn to work like Asians – points we don’t expect to hear from Infosys or Nasscom any time soon.


One Response to “Indian outsourcers as “chop-shops””

  1. June Harris on September 15th, 2010 2:55 am

    Wall Street Journal’s point is absolutely perfect; deep thinking. And Bruce’s advice to both Indian and American politicians is superb.

    But politicians on either side of the fence are the same.

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