STAMPED IMPRESSIONS
IT’s out of America
Reeta Sharma

After Bangalore, Chandigarh is fast emerging as the chosen outsourcing destination for US companies. Chandigarh is the outsourcing hub for about 50 US firms. Despite protests in the USA, it may be difficult to reverse the trend as a number of studies vouch for its gains, reports Reeta Sharma from the USA.

Have you heard of the term ‘Bangalored’? Well, it has been coined in America. As you travel through California, the word Bangalore appears to resound loudly. The story goes thus: In the process of outsourcing services, American IT companies discovered Bangalore from where they could hire employees at much cheaper rates than the USA. In addition, these employees had better qualifications and skills. But soon enough, offshoring (work being executed outside the US) created insecurity among Americans.

Outsourcing has led to a growing feeling of resentment among Americans that they are losing their jobs to Bangalore. And, now US companies are focusing on Chandigarh too. According to Seema Iyer, a Human Resource expert in the US, about 50 American companies have opened their outsourcing branches in Chandigarh and many more are likely to do so in the near future. As per the feedback, outsourcing from Chandigarh is far more cost effective than that from Delhi and Bangalore."

In the USA, you are likely to come across people wearing T-shirts with a warning, "Don’t get Bangalored". This unique way of protest has been evolved by a website to point out that American IT jobs are going to Bangalore. The site is selling these shirts at $ 15.99 (nearly Rs 800).

Yet another website of American info-tech professionals is selling T-shirts for $19.99 with "My job went to India. All I got is a stupid shirt" splashed on them. While the Bush government is not paying much attention to the undercurrents of apprehension and discontentment, John Kerry on the contrary is totally opposed to Americans losing their jobs to any other country.

I wonder whether Kerry will exploit this issue during electioneering? A country which is the flag-bearer of "globalisation" can hardly afford to take this kind of paradoxical stand. At a meeting, he complimented the Indian city, saying: "I want American cities to be wired like Bangalore." Interestingly, Kerry, who had allegedly lost the Presidential election more by design, is emerging as a strong contender in the coming elections.

According to Forester Research, nearly 3.3million American IT jobs had gone offshore by November 2002. And now the American Bureau of Labor Statistics has estimated that another over 3 million such jobs will go offshore by 2015. Besides India, the other countries sharing these jobs are Ireland, Canada, Israel and China. It is interesting to note that among these countries, India is a dominant player. By 2001, India had received $7.7 billion worth of outsourcing business. It is the second largest amount after Ireland, which received $8.3 billion worth of offshore business.

Although China’s share so far in this outsourcing is only $1.1 billion but in production activity it beats everybody. In fact yet another term that is doing the rounds in the US is, "getting shanghaied." Markets in the US are full of goods manufactured or produced in China. Be it clothing, toys, furniture, electric goods, utensils, pencils, pens, almost anything that you lay your hands on has the "made in China" tag.

Here’s a sample of media’s observations on this issue. An issue of The Economist in January 2003 mentions, "American’s pain, India’s gain." In June 2003, Business Week reported that American legislators were accusing India of stealing their country’s jobs. In July 2003, Associated Press raised the question that technical jobs had left the USA for India and Russia — who was to be blamed? In December 2003, Reuters quoted Morgan Stanley, "US jobs outsourced to India will double to about 150,000 in the next three years."

However, many studies have also analysed the positive outcome of outsourcing and offshore jobs. For instance, Jeffrey Cohen of Mckinsey and Company presented a report in January 2004 titled, "Is offshore outsourcing unpatriotic?" In this study, Cohen convincingly proves that though India captures 33 cents of each American dollar spent on outsourcing yet US economy generates additional value for its money. In return for one dollar, it actually gets 1.12-1.14 as additional value by way of import of US goods and services by providers in India, by transfer of profits by US providers in low-wage country to parent country, by way of value from US labour re-employment and the total direct benefit that remains in the US.

Cohen also points out that the US economy is expected to witness a major decline in its share of the working population. "By 2015, due to its huge retiring population, the US would require 15.6 million additional workforce to maintain similar share of working population as in 2001. This shortfall must be addressed through increased productivity and increased immigration," he concludes.

Seema, an HR expert in a Silicon Valley company, sees the human side of outsourcing. While, her company sees potential in saving money in the long run from outsourcing initiatives, her tasks include laying off employees. "It is emotionally draining to lay off colleagues, knowing that they may not get jobs for a while." While the outsourcing trend may be impossible to reverse, there are thought groups which are concentrating on finding a solution to ward off fears resulting from outsourcing. One of them includes having the companies pay a small portion of the savings from outsourcing towards training and improving the skills of employees for more strategic jobs that are unlikely to be outsourced.

This feature was published on August 28, 2004