10/16/2004

Indian Outsourcing See's end to U.S. Rhetoric

In Bombay, Indian outsoursing firms suffered little fallout from months of campain debate about the issue of job outsourcing to less expensive countries in Asia. Wipro, LTD. won 34 major new clients last quarter, this was echoed by the two other large outsourcers in India. With the election days away, most of the large Indian service exporters are not concerned about any actions by possible President-elect Kerry to close tax loopholes that are considered to be a major loophole that attracts American companies overseas.

John Kerry is remiss in his belief that simple tax law will keep large American companies from following the lure of low cost labor in Asia. The article cited the fact that many times better educated English-speaking Indians are paid a fifth of the pay that often time less productive American workers are paid for doing the same job. The demand for highly productive, cheap labor is definately high. Countries like India and China with a combined population almost 6 times that of the United States, are providing a seemingly unending supply to meet demand. American labor unions, and blue collar workers had better beware -- If you don't produce results, there are plenty of people that can.

8 comments:

peter_parker said...

A thought came to mind considering globalization and wages. Would it be possible that as the business world becomes more global and individual nations' economies converge wages in places in India and Asia be bid up to match those in the US? Or am I just naive in thinking that way? It would probably take years, but the it seems possible as the world becomes smaller.

pramahaphil said...

I certainly agree, but unfortunatly that would be many years in the future and mot Americans don't have that kind of forsight.

Bryce Larkin said...

I think that outsourcing to make more money for a company is a great option. Plus, if Kerry taxes more American companies, they will be forced to move their operations to another country.

Bryce Larkin said...

Also more labor unions will have to start working instead to complaining that their jobs are being taken over. I agree that there was a need for unions back in the early 1900s but now they are the one taking advantage of the American companies. More and more companies are going over seas because of the cheaper costs and no unions to tell management what to pay their employees.

Julie said...

Whenever I hear people complain about outsourcing I'm reminded of an article I read in the Wall Street Journal last spring. According to the Journal other countries outsource more jobs into the U.S. than the U.S. outsources to other countries. The jobs coming in are jobs that require creative thinking and initiative. So, they bring them here. It's the jobs that are repetitive and require little to no thought that are leaving the U.S. Isn't this a good sign?

John West said...

Outsourcing is a touchy subject these days and hopefully, after the elections, the rhetoric that politicians spread concerning it ceases to exist. If I'm an American firm, I would definitely outsource jobs to countries like India if it means that I get the same quality of workforce while paying less wages. It only seems right that in this everchanging, global society companies be able to decide where and how to derive their labor.

Maudi said...

It's sad that someone who is more qualified and more intellegent from a different country can't be paid the same as someone that is American. No matter the country or race, there should be a standard pay that you receive for the work that you output.

Dr. Tufte said...

We don't talk about growth theory in ECON 3010, but maybe we should a bit. Common sense tells us that wages and productivity are tied together - just because you outsource a job to India to save 80% on wages doesn't mean that you get to keep the balance. Productivity is lower in India too.

Why is that so? It turns out that individual productivity depends on a host of individual factors (that you can easily) list, and the level of aggregate technology that surrounds the worker. The latter is what a company loses when they outsource. So it isn't an easy choice to outsource because you can't always count on that level of aggregate technology. If you have trouble with that, here is a prurient example: a manager in the U.S. does not have to worry about dysentery, while a manager overseas does. Think about what that alone does to productivity.