Outsourcing is bigger topic in India than US

Outsourcing of services has been around for more than a decade. But noises around it continue, with direct and indirect barriers erected around it (like visas). How much does it matter?

As a country and as a world, we have passed that notion of shifting jobs purely for the sake of cost advantage. I think cost advantages were extreme 10 years ago and it made a lot of sense. Those advantages have shrunk over the years. Look at attrition — many outsourcing companies have 25-30% annual attrition, increasing costs of doing business and impacting quality. You can’t run a sustainable, high quality business based on that. Costs will increase. I don’t think outsourcing is a compelling argument or reason, in the long term, for jobs shifting from one part of the world to another.

It’s like level of water —when the level is too high it will flow from higher level to the lower level. Much like work shifted from one country to another, as wage disparity was high. Whether it is clothes, that were made in some countries across Asia and shipped across, or services, work will continue to shift. As it becomes competitive, lot more countries are doing it. In clothes, margins are no longer high, but the guys in the US still get them cheaper and that’s what matters to the customers (in US).

What about jobs going out from the US?

Unemployment is high in the US and that’s a problem. But today call centers are not only in India but everywhere. From India, some of the call centre work is going to new destinations (Philippines, Vietnam etc), where costs, attrition is lower. Outsourcing is not that big a topic in the US. It’s a bigger topic in India.

But when US president comes and talks about it, don’t you think it’s a big deal?

People have to look at the larger picture of president Obama’s visit and not simply that outsourcing is a big issue. When was the last time a US president visited India? Not many US presidents have come here and that too so early in their term. The way to look at it is that its a recognition that India is now a fast growing market and it is a market that needs to be paid attention to much more carefully. It is a positive sign for India. All speeches (by US president) point to the fact that India is now a world power and it should be an equal partner to the US. That’s the theme and message coming out of the visit. President Obama is doing two things: trying to create business between the two countries and trying to address the issues where India is worried about. It is not that US is worried about outsourcing and visa fees. Those are things that people in India worry about and not people in the US.

Source:http://economictimes.indiatimes.com/articleshow/6891312.cms


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