India says US protectionism is regressive

[Lankan Ranger]

India says US protectionism is regressive

India's trade minister lashed out at perceived protectionist moves by the US on Saturday, calling them "regressive" and saying they could delay economic recovery.

The statement by Trade Minister Anand Sharma came after the state of Ohio banned outsourcing back-office jobs to places such as India in an effort to boost domestic employment.

It also follows a recent US law raising visa fees for skilled workers, that will India says will hit its flagship outsourcing sector.

"We feel these are regressive measures," Sharma told reporters as he visited India's second-largest software exporter by sales, Infosys Technologies, in the southern city of Bangalore.

"The leading economy of the world -- the United State of America -- has to have more confidence to engage with the rest of the world," Sharma said in televised remarks.

Ohio state has banned sending abroad government information technology and back-office projects.

India said earlier in the week it would formally raise its concern over Ohio's ban on offshore outsourcing with the United States at a high-level trade meeting in Washington later this month.

New Delhi will also raise the issue of increased fees for skilled worker visas that will boost annual US visa costs for the outsourcing sector by 200-250 million dollars annually, according to industry estimates.

"Protectionist tendencies are unhealthy and negative, and lessons from the past make it abundantly clear they end up deepening the recession, they do not help in recovery of economies," Sharma said.

"Any mindset, which is isolationist and inward-looking ends up hurting the economies and societies," he said.

The US measures have come as the country seeks to combat unemployment, which is nearing 10 percent.

The row comes ahead of US President Barack Obama's visit to India in November.

India says US protectionism is regressive - LANKA BUSINESS ONLINE

 

[Patrician]

Obama believes that he is acting in the interest of the american people while in fact he is not.

These actions will force the american companies to get their job done at home (a much costlier option) rather than in other countries such as India (a much cheaper/competitive option). He is obviously choosing the high cost option and forcing the companies to do so will lead to a significant increase in their costs reducing profits and making them unprofitable in the long run.

Nowadays every company has to compete globally be it Indian company or American company. Cost is a major factor which can lead to american companies in loosing contracts/tenders.

It's very simple indeed. There is an american who does your job at $50 an hour and there is an Indian doing the same job at $10 an hour, work 12 hours a day and even weekends. Whom will you choose?

It is nothing but a popularist measure which will backfire on american industry in the long run.

 

[somebozo]

Well the Indians are not playing a fair game of competiting in quality. Instead they are destroying the job market by offering services at 1/3rd cost. Many countries are taking protectionist measures against India and Indians. Evens saudis have now reduced IT profession visas for India.

Otherway around the Indian services and professional are in demand not because of local shortage but because they are willing to work for cheap. This deprives the locals from their rightful employment chance.

The american move to raise visa cost for Indians are also to encourage overseas hiring from other countries. Because the american IT industry is rapidly growing into mini-india which the americans deem threat to workplace diversity and IPR protection.

 

[RobbieS]

Well the Indians are not playing a fair game of competiting in quality. Instead they are destroying the job market by offering services at 1/3rd cost. Many countries are taking protectionist measures against India and Indians. Evens saudis have now reduced IT profession visas for India.

Otherway around the Indian services and professional are in demand not because of local shortage but because they are willing to work for cheap. This deprives the locals from their rightful employment chance.

The american move to raise visa cost for Indians are also to encourage overseas hiring from other countries. Because the american IT industry is rapidly growing into mini-india which the americans deem threat to workplace diversity and IPR protection.

What you just mentioned is the first recourse of the anti-India and anti-outsourcing guy. You are ill-informed and lack basic economic sense if you think low costs is all that India offers to companies that outsource. Every company that outsources a job takes the Cost and Quality trade-off into account. No company will be willing to sacrifice quality for cost because that means erosion of brand value and a decrease in customer satisfaction. And this is true for all companies. Do you think Fortune 500 companies have been sacrificing quality levels just to save costs? They are fools enough to reduce their customer satisfaction levels just for a few extra dollars in savings?

The truth is that Indian companies like TCS, Infosys and others offer services of comparable quality, if not less at a 1/4 of the cost. This is mainly due to the cheap technical labor available in India. The cost difference is not due to a reduction in quality but simply because Indian institutes produce grads at 1/10 the cost of the US institutes. Translate this into thousands of IT grads and you have a cheap source of technical labor without any compromise on quality.

The real issue in USA is that outsourcing has been equated to anti-Americanism, thus giving it a bad name. In essence, outsourcing helps save American jobs in the long term by making American companies stay competitive. The sooner the US govt. realized this the better it would be for the US economy.

 

[majesticpankaj]

Well the Indians are not playing a fair game of competiting in quality. Instead they are destroying the job market by offering services at 1/3rd cost. Many countries are taking protectionist measures against India and Indians. Evens saudis have now reduced IT profession visas for India.

Otherway around the Indian services and professional are in demand not because of local shortage but because they are willing to work for cheap. This deprives the locals from their rightful employment chance.

The american move to raise visa cost for Indians are also to encourage overseas hiring from other countries. Because the american IT industry is rapidly growing into mini-india which the americans deem threat to workplace diversity and IPR protection.

for your kind information, TCS client base has 49 of top 100 fortune US companies. my wild guess is this companies dont sacrifice for quality.

 

[Patrician]

@Somebozo There is an american who does your job at $50 an hour and there is an Indian doing the same job at $10 an hour, work 12 hours a day and even weekends. Whom will you choose?

Call it fair/unfair or Indian economic terrorism for all we care. The bottomline is, if you err in basic economic principles, you will get your company closed.

 

[gregarious]

Its not just Indian companies, American companies like IBM, Google, Intel, Microsoft & Accenture too have plenty of Development & research centres in India, again I said Development & research centres and not just back office supprot jobs..the quality has to be good in reasearch, its not about low cost

 

[somebozo]

What you just mentioned is the first recourse of the anti-India and anti-outsourcing guy. You are ill-informed and lack basic economic sense if you think low costs is all that India offers to companies that outsource. Every company that outsources a job takes the Cost and Quality trade-off into account. No company will be willing to sacrifice quality for cost because that means erosion of brand value and a decrease in customer satisfaction. And this is true for all companies. Do you think Fortune 500 companies have been sacrificing quality levels just to save costs? They are fools enough to reduce their customer satisfaction levels just for a few extra dollars in savings?.

Run a quick search on consumer surveys website and you will have a clear idea how many unsatisfied customers have been created over years. What about bad-accent, illogical or rude tele-reps?? Leak of confidential data?? IPR theft?? Business virtually taken hostage by outsourcing thugs?? Isnt that determinal to brand value and confidence?? Outsourcing by itself has been happening for years and isnt bad infact transparent to consumer all the time. But cheap outsourcing is something of total collapse. Again the difference is that of respectable companies like TCS, InfoSYS, TATA, Sattayam and mushroomed ones in every corner of street. Making a wise choice has longterm benefits.

The truth is that Indian companies like TCS, Infosys and others offer services of comparable quality, if not less at a 1/4 of the cost. This is mainly due to the cheap technical labor available in India. The cost difference is not due to a reduction in quality but simply because Indian institutes produce grads at 1/10 the cost of the US institutes. Translate this into thousands of IT grads and you have a cheap source of technical labor without any compromise on quality.

The above mentioned companies are respectable brand name icons for their unmatched services and quality. However the governments will not be happy for someone damaging their local job market. An american who earns in dollar and spends in dollar can never compete with an indian who earns in dollar and spends in rupees. This is where the unfair advantage comes. Outsourcing services is verily a "service export" and hence should be taxed appropiately just like cars, finished goods, etc etc are tax.

The real issue in USA is that outsourcing has been equated to anti-Americanism, thus giving it a bad name. In essence, outsourcing helps save American jobs in the long term by making American companies stay competitive. The sooner the US govt. realized this the better it would be for the US economy.

How can outsourcing help save american jobs when the local loses his job in favour of a teleworker from banglore?? Yes it helps the business stay competitive however those businesses also have an obligation to return in the community they are earning from. What justice is that the consumer power comes from America but pay checks go to India?? A correct phrase would be "outsourcing helps save american business".

@Somebozo There is an american who does your job at $50 an hour and there is an Indian doing the same job at $10 an hour, work 12 hours a day and even weekends. Whom will you choose?

Call it fair/unfair or Indian economic terrorism for all we care. The bottomline is, if you err in basic economic principles, you will get your company closed.

As a business owner I am in for making a profit so lower the cost better the profit but this is why governments make laws to balance all sides. Such scenerio falls under unfair advantage. It reflects the Indian desperation which they suffer back at home due to lack of economic oppurtunities. And cheaper doesnt mean better either. A person who is working at 1/3 of market wage will also render 1/3rd of quality. A world wide rule of thumb is to hire forigeners when a local is not available. Never a law has said hire forigener because local is expensive.

Its not just Indian companies, American companies like IBM, Google, Intel, Microsoft & Accenture too have plenty of Development & research centres in India, again I said Development & research centres and not just back office supprot jobs..the quality has to be good in reasearch, its not about low cost

So do they have in Europe, Egypt, Saudi Arabia and even Lebanon. Multi Nationals set up their R/D in all major hubs to serve localized contents. This is business as usual it does not elaborate India into higher than thou.

 

[mike05]

What you just mentioned is the first recourse of the anti-India and anti-outsourcing guy. You are ill-informed and lack basic economic sense if you think low costs is all that India offers to companies that outsource. Every company that outsources a job takes the Cost and Quality trade-off into account. No company will be willing to sacrifice quality for cost because that means erosion of brand value and a decrease in customer satisfaction. And this is true for all companies. Do you think Fortune 500 companies have been sacrificing quality levels just to save costs? They are fools enough to reduce their customer satisfaction levels just for a few extra dollars in savings?

I can't agree with this statement totally, pending on how technical the job is thats being outsourced quality will always be sacrificed and its not some insignificant amount as you put it. But the same goes when good are manufactured in China and quality also suffers too because ultimately you pay for what you get.

Fortune 500 companies know they can get away pissing off customers because ultimately its the cost that matters to them, so what if you buy a computer thats made in China with questionable toxic materials that comes with IT support from India reading off a script because cheap is cheap thats whats what the consumer cares about.

 

[Patrician]

As a business owner I am in for making a profit so lower the cost better the profit but this is why governments make laws to balance all sides. Such scenerio falls under unfair advantage. It reflects the Indian desperation which they suffer back at home due to lack of economic oppurtunities. And cheaper doesnt mean better either. A person who is working at 1/3 of market wage will also render 1/3rd of quality. A world wide rule of thumb is to hire forigeners when a local is not available. Never a law has said hire forigener because local is expensive.

Oh bhai mere ek baar company doob gayi toh ye ethical/unethical/desperate etc. ko leke tuntuna bajaoge?

In the world of business money, profit and survival of the company is all that matters. If any govt. tries to reverse that, it will only spell the doom of its own companies.

 

[RobbieS]

Run a quick search on consumer surveys website and you will have a clear idea how many unsatisfied customers have been created over years. What about bad-accent, illogical or rude tele-reps?? Leak of confidential data?? IPR theft?? Business virtually taken hostage by outsourcing thugs?? Isnt that determinal to brand value and confidence?? Outsourcing by itself has been happening for years and isnt bad infact transparent to consumer all the time. But cheap outsourcing is something of total collapse. Again the difference is that of respectable companies like TCS, InfoSYS, TATA, Sattayam and mushroomed ones in every corner of street. Making a wise choice has longterm benefits.

And do we have a comparison of data-theft and other issues for companies that outsource and those who dont? Who is to say that these incidents dont happen in companies that do not outsource to India or to companies that outsource within the US only?

Agreed, the issues you mentioned are relevant and are the difference between a company that is willing to save $50 per call v/s the company that tries to save $90 out of a possible $100. There are relative quality levels to everything. For the companies that compromise on quality by hiring start-up or fly by night outsourcing companies, such incidents do occur. But whats wrong in your post is the generalization that every Indian IT company plays on costs alone and provides bad services in return.

The above mentioned companies are respectable brand name icons for their unmatched services and quality. However the governments will not be happy for someone damaging their local job market. An american who earns in dollar and spends in dollar can never compete with an indian who earns in dollar and spends in rupees. This is where the unfair advantage comes. Outsourcing services is verily a "service export" and hence should be taxed appropiately just like cars, finished goods, etc etc are tax

.

Fair point. But it is taxed in India. Indian companies do pay taxes to GoI for their IT exports. Its not like the IT services are subsidized by the govt. But its unfair to restrict the US companies that import these services. The US govt. often plays the tune of a free and fair playing ground in developing economies but fails to follow it when it comes to their home turf.

And the currency variation will always remain untill the developing economies catch up. This currency variation is what gives US companies high values of return on their investments in India. That is why its cheaper to own and run a McDs in India. Thats why its cheaper to start a new factory for the GMs and the Fords in India. You dont see the US govt cribbing about that, do you?

How can outsourcing help save american jobs when the local loses his job in favour of a teleworker from banglore?? Yes it helps the business stay competitive however those businesses also have an obligation to return in the community they are earning from. What justice is that the consumer power comes from America but pay checks go to India?? A correct phrase would be "outsourcing helps save american business".

Let me give you an eg. GE employs a total of 100,000 people. It has outsourced close to 20,000 jobs to India. By doing that it has remained competitive and safeguarded the jobs of the rest of the 80,000. What would you rather have? 80,000 jobs for the next 50 years or 100,000 jobs for 10 years and then the company goes bust!

The truth is that developing countries have caught up with the West in terms of technical know-how. Now, I see this regulation as a temporary blip. Soon, these US companies are going to open owned captive centers in India (as HP, TI, IBM etc are already doing) and bypass these regulations as they will be owning these centers instead of outsourcing. The rest, well they wont last long.

 

[RobbieS]

I can't agree with this statement totally, pending on how technical the job is thats being outsourced quality will always be sacrificed and its not some insignificant amount as you put it. But the same goes when good are manufactured in China and quality also suffers too because ultimately you pay for what you get.

Quality may or may not be sacrificed. And more often than not its the latter because of problems like communication and the distance barrier. But there's always a relative level to quality. Companies have an idea of the quality that they can afford to drop without pissing off their customers. There is always a minimum acceptable limit.

Fortune 500 companies know they can get away pissing off customers because ultimately its the cost that matters to them, so what if you buy a computer thats made in China with questionable toxic materials that comes with IT support from India reading off a script because cheap is cheap thats whats what the consumer cares about.

You are so wrong there! You think names like GE, IBM, HP, Texas Inst. etc have been top of the Fortune and Forbes charts for 30-50 years by just concentrating on costs? These names have mastered the long-term game. If to them the customer was less important than the profit, they wouldnt have lasted as long as they did. They earn profit because their stuff sells, and their stuff sells due to a happy customer. DO you think they don't know that?

And tell me something, you are a customer yourself, would you buy a product a second time if you're unhappy with the service or the customer support? Will HP be able to sell its Data Warehousing system year after year if its customers were not happy with the post-sales and maintenance support tasks? Dont underestimate the corporate customer or for that matter, any customer. They want value for money, but not at the cost of quality.

 

[nForce]

Well the Indians are not playing a fair game of competiting in quality. Instead they are destroying the job market by offering services at 1/3rd cost. Many countries are taking protectionist measures against India and Indians. Evens saudis have now reduced IT profession visas for India.

Otherway around the Indian services and professional are in demand not because of local shortage but because they are willing to work for cheap. This deprives the locals from their rightful employment chance.

The american move to raise visa cost for Indians are also to encourage overseas hiring from other countries. Because the american IT industry is rapidly growing into mini-india which the americans deem threat to workplace diversity and IPR protection.

Cant really help if 1 USD = 46.6 INR

With that money you will be able to buy yourself a whole square meal in India,but only as much as a bottle of water in US.No wonder it is cheap for the US companies to outsource jobs to India...

 

[SandsofTime]

When American is unable to buy any more products because their sources of income are reduced and no further consumer debt can be accumulated, demand for products and services that are outsourced will also fall. Then American will start working for less and help to bring back some more jobs. In future Pak will hold an advantage over Indo/China after security issues subside, since Pak currency is cheaper than both.

 

[RobbieS]

When American is unable to buy any more products because their sources of income are reduced and no further consumer debt can be accumulated, demand for products and services that are outsourced will also fall. Then American will start working for less and help to bring back some more jobs. In future Pak will hold an advantage over Indo/China after security issues subside, since Pak currency is cheaper than both.

That is expected. Pakistan has a lot of potential, not simply because of the low value of its currency but more so due to its yet untapped technical labor resources.