Friday, December 30, 2011

Why is Congress so hysterical about outsourcing to India? Why this "kolaveri?"

Manikandan is a twenty-year old final year college student in the southern Indian city of Chennai.  His father drives an autorickshaw (a three-wheeled vehicle for hire) and his mother cleans four different homes.  Neither parent has completed high school.

Before attending college in the evenings, Manikandan works for a courier company, in order to earn whatever little he can in order to help pay for the family's expenses. With his college program nearing the end, Manikandan has started applying for employment and has been called for interviews.  He is looking for an entry-level job in any one of the Business Process Outsourcing (BPO) firms in the city, at a starting salary somewhere in the neighborhood of about 10,000 rupees, which, at current exchange rates, is about $200.

Yes, a job that pays the equivalent of about $200 per month is a dream job to an overwhelming number of Indians who, too, wish to have a decent life.  This is, after all, a country where the per capita monthly income is just about $120, without adjusting for purchasing power.

Even a fifth grader in Jeff Foxworthy's TV show will know very well that nobody in the US will work for a monthly pay of $200.  As I would joke with students in my classes, $200 can barely get us a cup of coffee at Starbucks anymore!

But, to Manikandan here in Chennai, $200 is a phenomenal opportunity to be gainfully employed and to help his sister and parents.

Of course, a call center is merely one type of outsourcing activities.  Many kinds of work are often contracted out—from engineering designs for complex projects, to scanning documents and data entry.  India's economic growth has resulted from extensive outsourcing operations, similar to how China has become the world's factory.  So much so that on the last trading day of 2011, Tata Consultancy Services (TCS) became the largest Indian company in terms of market capitalization.

Investment analysts and commentators continue to place their bets on the leading Indian BPO firms: TCS, Infosys, and Wipro.  As Thomas Friedman acknowledges in his bestselling and influential book, “The World is Flat,” it was the remarks of the founder of Infosys, Narayana Murthy, which catalyzed Friedman to think about the changing global economic geography.

Thus, given the importance of the BPO activities, Indian companies and the government are closely following the political rhetoric in the US over outsourcing.  India's ambassador to the US, Nirupama Roy, noted that "we are currently making a detailed analysis of the impact of the bill on the BPO industry."

In a recent interview, Phaneesh Murthy, who is the CEO of one of the leading BPO firms, operating from the US, emphatically observed that "India should lobby aggressively that the offshoring of BPO business has created jobs globally and has boosted the global economy and made the U.S. corporations more profitable. It is important to realise that this has also created high-value jobs in the U.S., including consulting jobs."

At the end of it all, it makes no sense to me why politicians in the US and the US Congress felt it was the nation's priority to worry about outsourcing and to consider HR 3596 (the U.S Call Center Workers & Consumer Protection Act.)  Under the guise of consumer protection, the bill is nothing but a variation of that tired old theme of "buy American." 

The eventual outcome of the bill itself is not as important to me as much as my worry over the misguided and populist approaches to end the prolonged slump in employment creation in the US.

At the ground level, the bill and related populist rhetoric do not project a positive image of the US. Instead of focusing on creating jobs led by advancements in science and technology, as my adopted country has done in the past on its way to becoming the global economic superpower, the US now comes across as a selfish rich person trying to slam the doors on the young and promising, but poor, people like Manikandan.

As a popular "Tanglish" song, which has gone viral, asks, "why this kolaveri?"

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