President Bush of the US of A has sealed his fate with the 2nd gulf war(I really don’t want to say which way). Now as a crunching finale to their poll campaigns US legislators have been pushing bans on outsourcing. This when they are still extending agricultural subsidies to their own farmers, which implies that they are killing the local agricultural market in third world countries.
Outsourcing of US white-collar jobs has got everybody in the US shouting. Wired magazine even did a feature on this in it’s Feb issue.
From our(Indian) perspective
We have spent years upon years importing goods and services from the US. For crying out loud they almost exclusively controlled who had and who did not have computers about a generation ago. All medical services and drugs were bought from the west. The shifting of manufacturing services to other destinations was when the US was hit first. Cheap labour in South Asia and other 3rd world countries, who in the eyes of the American’s are ‘poor’ countries, have been categorically proving financially more viable alternatives to domestic production. The disparity that the Americans are proud of is the sole reason for their goods and services being imported. What we see here is world economics trying to correct a lop-sided balance. The corrective lop-side, as I would like to call it, was first seen when manufacturing of motor cars and other mass produced items became dirt cheap in Japan and other countries. In this second wave it is intellectual property which is moving out of the US. Don’t get me wrong each country is doing it’s best to gain the maximum from these winds of change.
- America is trying to hold on to it’s position and jobs by banning outsourcing
- China is continuing devaluing it’s currency to keep outsourcing profitable.
- Indian politicians are trying to extract feel-good points for the outsourcing jobs it has got over the past 2 decades. and of course the RBI is checking the rising rupee
- Even companies are thinking up new methodologies to circumvent existing laws to cut costs.
But I feel that legislations to ban outsourcing will not be well taken by the US economy. Although analysts may claim that it will be better in the long term. who are they kidding. Did the drive to buy American goods only work in the 70′s and 80′s? manufacturing has by and large shifted outside the US. US Companies like Trilogy, Sapient and Tavant have gone further and founded their branches on Indian shore. So even if a job is given to an American firm and third party sub-contracting is banned. The company itself will be using workers in India. This is one of the more direct ways of circumventing the proposed legislations. I’m sure there are subtler ways which are virtually untraceable.
So wake up I say. the outsourcing wave may do for us what the micro-devices manufacturing did for the south east Asian countries. 
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I really liked your analysis, here’s the review:
No need to say, it’s obvious
Very true, but it’s good for us too.
Thats their job, isn’t it. Anyways, a rising rupee is not very good for our industries.
Bull’s eye
That’s a bit too much, though
btw, are you an Eco Grad?
Far from It I’m a computer engineer.
BTW how does china devaluing it’s currency help us?
Chinese yuan’s devaluation puts downward pressure on all other East-asian currencies but doesn’t much affect the Rupee, which is appreciating by itself anyway. Hence most of the asian ‘markets’ will be hurt in the long run, if this devaluation continues.
Even US economy is gonna take a beating if this continues. With US & Chinese markets going down, India becomes a very attractive destination. The US will never let this happen, though. They’ll use the MFN status grant as a carrot (or even a stick) for China. In that case too, we stand to gain(for obvious reasons)
There are many possible counter-arguments to this, esp. the one related to the forex reserves. But it’s high time that we stop using forex reserves as a yardstick for measuring our economic stability. Forex reserves do a nation no good, only a bare minimum is necessary.
Thats the part I didn’t think about. Hmm This is more interesting than I thought. That more or less explains whats been going on in the better developed asian economies.
I agree about the Forex. It’s mostly FDI due to better interest rates any way. thats not gonna last. It’s just the govt poll gimmics which make it seem like a great acheivement. I Also realise that once the rupee is no longer containable the outsourcing mania will subside too. But the infrastructural input which is going into it will stay and benefit us and help us develop the local market, which is nascent in the services sector at least.
Outsourcing mania
Nice way to put it
You’re right. Also the fact that forex reserves are nothing but US Treasury bills. So we are actually financing the US economy by providing it easy & reliable leverage. Also, these reserves have come after paying a heavy price in terms of domestic contraction. It’s like being externally strong & internally weak. Methinks it’s high time India changes its monetary policy. But elections are coming…
three cheers for election year in the US and India
Hip Hip Hurray!!
I hope this Bush guy gets the beating of his life this time over. He’s such a waste. (See Hotshots 2, they’ve done a great spoof on him)
On the other hand, I’d rather have ABV again in India. No better alternative
Seen Hot shots (1 and 2) it’s on his father though about the 1st gulf war.
On ABV I second the motion and it’s sure to be carried….
Yeah.. but whenever I see that movie, it reminds me of Bush Jr. only (he’s more foolish)
The dinner scene with the Chinese/Jap PM is absolutely hilarious
)
Heppy Budday, pal.