Of American dreams, Indian jobs

President Barack Obamas swing against offshoring US jobs just manages to tickle the Indian palate

President Barack Obama’s latest outburst against US firms shifting jobs overseas has once again put in the line of fire India’s emerging outsourcing industry -- popularly known as Business Process Outsourcing (BPO) -- specially in the competitive segments like software services and financial services.

It is not for the first time that Obama has hyped up on his anti-outsourcing rhetoric. Last year he had indicated that US firms shipping jobs overseas would be required to pay more taxes. “It is a tax code that says you should pay lower taxes if you create a job in Bangalore than if you can create one in Buffalo,” Obama had stated, hinting that he would withdraw such tax benefits.

Experts and analysts feel even if Obama goes ahead with this type of protectionism, it would hurt the US economy more than the developing countries like India, who are fast emerging as cost-effective and competitive service providers in a wide range of economic activities.

Industry watchers in the US even feel that such protectionist measures are short-sighted because many US firms earn mind boggling revenues from their overseas operations and any protectionist stance could lead to a backlash in other markets. Most US firms dealing with software development services resort to outsourcing as it works out cheaper.

Self-destructive
Even the top US financial firms like Citigroup and JP Morgan outsource a major chunk of their financial services. For instance, Citigroup generates more than 50 per cent of its revenues outside the US and nearly 65 per cent of its workforce operate from abroad with its financial network spanning over 100 countries worldwide.       
As far as India is concerned, experts feel Information Technology (IT) firms, who appear to be in the firing line of Obama’s anti-outsourcing outbursts, are not going to be impacted much. Instead, Obama’s proposal would primarily impact US-headquartered companies like IBM, Hewlett Packard, Microsoft and Oracle that have overseas operations, including in India.

Most large American companies earn more than 50 per cent of their revenues from markets outside the US and will be affected by the proposed tax reforms.
It is now being widely acknowledged that the phenomenon of outsourcing is increasingly becoming an integral part of global business dynamics for major firms in rich and developed countries to remain competitive in the global market.
Obama simply cannot reverse it. American firms are increasingly coming under intense pressure to cut down cost and have no option other than to outsource to emerging developing economies like India, Brazil and South Africa to bring down costs.
In the face of fast growing economies like China and India expanding their global trade at a galloping pace, Obama also wants to increase US trade share. But trade is a two-way phenomenon. If US firms want to push up their exports, they will have to be price competitive. For this US firms will have to heavily depend on outsourcing to low cost workspots.

‘O bring back...O bring back my jobs to me...’
The worst of the storm (economic recession) has passed..., said US President Barack Obama in his end-of-year State of the Union address to the Congress.
But....one in 10 Americans still cannot find work,  many businesses have shuttered,  home values have declined and  small towns and rural communities have been hit especially hard.

In the new decade, it’s time the American people got a government that matches their decency; that embodies their strength..., and the delivery on that promise begins with the economy - - shoring up the banks which created the crisis, a more transparent and accountable financial rescue programme than that of the previous administration’s, steps to get the economy growing again, saving as many jobs as possible, and helping Americans who had become unemployed.

 The true engine of job creation in this country will always be America’s businesses.  
And to encourage businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America.
The only way to move to full employment is to lay a new foundation for long-term economic growth. ...I've been told that our political system is too gridlocked, and that we should just put things on hold for a while. I have one simple question: How long should America put its future on hold?

...China is not waiting to revamp its economy. Germany is not waiting. India is not waiting. These nations -- they’re not standing still. These nations aren’t playing for second place. They're putting more emphasis on math and science. They’re rebuilding their infrastructure. They’re making serious investments in clean energy because they want those jobs. Well, I do not accept second place for the United States of America.