Why you can’t stop outsourcing?
October 18, 2010
In most of my blogs I mention somewhere that outsourcing to India from the US and other countries will continue till the time it makes economic sense for businesses to outsource. Proposed legislation against it would not work for the simple reason that businesses are not run on election time contingencies, but are based on the cold facts of efficiency and cost effectiveness. The recent non passage of President Obama’s protectionist legislation may or may not have been foreseen by perceptive analysts, but outsourcing would have continued unabated even if it had been passed.
The fact of the matter is that American firms today are global in nature and they are so because they want to remain competitive and relevant. You cannot selectively be global and put up walls at the slightest hint of discomfort and jeopardise your very future and survival. The US economy is relevant today because it is a highly innovative economy and adapts rapidly to changing scenarios. Banning outsourcing cuts at the very heart of this inventiveness.
The US traditionally has attracted the best talent in the world because of its remarkable openness and willingness to take the best from the world and adapt it to its needs. If it today clams up and puts up walls around it, it will strike at its own roots. Today the US president constantly lectures that the American education system needs reforms or the Indian and Chinese students will get ahead. This shows scant regard for the great institutions of learning that the American system has thrown up in the past and which has always attracted and retained the best talents in the world.
Collaborating with Indian IT in sectors such as biotechnology, pharmaceuticals, energy, electronics, nano technology, material sciences and so on will only help US industry maintain its edge over the world. America has long lost its traditional lead in automobile and other manufacturing to two Asian giants Japan and China respectively. With India it has so far found an able and willing partner which can help sustain its edge in the services and knowledge economy. Nothing should be done which harms this association.
India and US are the greatest democracies of the world, and as is the wont of democracies ever so often populist decisions which may not be the best ones are taken. It is also a fact that sooner or later there is realization and course correction. For years India followed an anti west pro Soviet Union policy, but the collapse of the communist Empire made it do a course correction. On a relatively smaller matter of outsourcing I am sure there will be more convergence than divergence.
Hiccups will come and go, what will remain is the exigencies of business and they dictate that outsourcing is here to stay. As the world moves towards integrating and becoming a global village in the true sense, debates about outsourcing and its advisability will become more or less redundant.