Wednesday, June 17, 2009

President Obama, Bangalore and Outsourcing: Some Observations

(This entry was originally uploaded on May 2009 and is based on the context of that time. Sadly, it got deleted because of technical problem. I am putting it here now.)

Barack Obama is the President of United States of America and he is considered to be the most powerful person on earth as his country is only the super-power in our time. He won a landslide victor in the General election in 2008 and he had hardly any time to celebrate it as from the first day in office, he has to deal with the economic recession. It is hurting his country a lot and USA has to think of helping and even leading other countries too. So, it is a very difficult job to find a way out from the economic recession. Now, his anti-outsourcing statement caused an uproar in Indian IT industry.

There is hardly any sign of the recovery from economic recession anywhere in the world not. Yes, some people are optimistic and some experts are even indicating that perhaps the worst is over and recovery is on the way. However, million of people especially in rich countries like USA are not convinced yet. There is no significant improvement in consumer confidence anywhere in the world. Just take a look at the auto sales in April 2009 in USA and Japan and then you will understand what I am saying.

In a bid to get some popular support, Mr. Obama recently announced that the companies who outsource their jobs to other countries will not get the benefit of tax deduction. Naturally, if this proposal is implemented then Indian outsourcing industry fall into problem because thousands of jobs have been outsourced to India in the last one decade by US companies. Outsourcing is now acting like a backbone to the Indian export sector and is perhaps the most important job creating sector for the educated people in the country. So, industry leaders and even Indian media are worried about it. In fact, this news item has got a lot of coverage in Indian media as I can see in Google News and even in Google Trends India.

Naturally, everyone in India has either criticized or expressed concern about this matter. Well, I understand their sentiment. However, what I do not like is that they just focused on this part of Obama tax plan. Obama has also stated that he wanted that American rich people and big companies stop taking their money and wealth to those countries that are called tax haven and this way, they can avoid paying tax in America. In fact, in the US, this aspect of Obama’s plan suffered more criticism than anit-outsourcing plan.

India media as well as Indian industry leaders have to realize that Obama is in a very tight position now. More than 6 million people became unemployed since the recession started. At this moment, it is his duty and goal to save even one job. A popular idea among many American workers is that their jobs are stake because of outsourcing by large ‘greedy’ US corporate houses. Well, whether it is true or not is a matter of debate. But there is no doubt that many people in USA are not happy with the matter of outsourcing. So, the Indian journalists and industry leaders should try to understand that USA is a democratic country just like India and the president of USA has to listen to public opinion just like the Indian Prime Minister.

Instead, Indian IT companies now should try to get some more facilities from Indian government so that they can cover at least some part of the less they may suffer if Obama goes ahead with his plan. Indian media should also try to convince the government in this regard. I like to see that Indian media tries to raise awareness among everyone about creating a domestic IT market. Indian companies have to think of improving their standard and become at per with the leading US companies. Then, they will not need to be worried about any tax plan of Obama.

“create a job in Bangalore, India, than if you create one in Buffalo, New York.”

This was his words and the use of the term ‘Bangalore’ is very significant here. It clearly shows that Obama is not a supporter of outsourcing to Bangalore and India. If he goes along with his policy then many US companies will fall into a big dilemma over outsourcing of jobs to India. Some of the companies will feel that the benefit that outsourcing of jobs can bring for them may not be enough to compensate the loss they would suffer from being out of the tax break. I think that small and medium sized companies would take a very hard and long look before outsourcing any job to India once this plan is approved by the government. Large companies can outsource many jobs at a time and they can save a lot of money. However, small and medium sized companies do not have many workers in USA in the first place.

Indian companies, Indian government, Indian media and even Indian universities should now do some soul searching and at least sit together about this issue. Of course, now, it is the time of general election and Indian Premier League. After the election finishes and new government takes oath, the decision makers should sit with all the stake holders and try to form an action plan.

What I like to remind the readers and catch your attention is that I find a basic similarity between the Obama government and the new Indian government that is going to come to power after the election. Just like the Obama administration sat in office during an economic crisis the same thing is happening about the upcoming Indian government. The leaders of the new government will have to start from the first day addressing the economic problem just like Obama and his colleagues did.

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