Should Outsourcing be Banned in this era of Globalization?

Well, herez the transcript of another debate I participated in. I was FOR the motion.
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Good Afternoon, respected Chairperson Sir, revered Judges, my worthy opponents and my dear friends. I, KPOWERINFINITY, firmly believe that outsourcing does more harm than good.

I will start with an incident which happened in October last year. A woman in Pakistan doing cut-rate clerical work for University of California San Francisco Medical Center threatened to post patients’ confidential files on the Internet unless she was paid more money. The best part is that UCSF never knew that it was shipping work overseas. It had contracted the work to Transcription Stat, a California based firm, and after being outsourced several times over, it reached the woman in question, Lubona Baloch. This incident sparked off a lot of debate in the United States about how outsourcing could be counterproductive for national security, and confidentiality of sensitive information. It is impossible to be sure if the sensitive information traveling out of the source country is not finding its way to potential terrorists.

Another big implication of outsourcing is on the unemployment in the United States, which has been well debated. I will let facts speak for themselves:

· A study by the Harvard professor, Dr. George J Boreas, found that increasing labor and outsourcing cost the average native-born American men an average $1700 in annual wages. Worst hit were native-born black and Hispanic Americans who suffered 4-5% wage reductions.

· Private sector jobs have shrunk by 2.6 million. In the “jobless” recovery, new jobs that are created pay on an average $9,000 less than those that are moving overseas.

· At the same time, healthcare and education costs are hitting the roof. Healthcare expenses have increased by over $800 in the last five years. Last year 220,000 young Americans had to give up college education because the tuition was too high.

· In contrast, average profits of US corporations pushed past $ 1 trillion in 2003, the increase of 18.3% topping 2002’s 17.2%.

The crux is that money is radically flowing out of the pockets of poor US workers to fill corporate coffers. The double whammy of lower incomes and higher taxes, will leave the average worker in abject adversity. Incidents like those of Scott Kirwin who trained three of his replacements, or the Bank of America employee committing suicide when he was laid off after having been forced to train his replacement add oil to the fire.

A direct consequence of the manufacturing outsourcing in the last 2 decades is that the United States trade deficit is soaring. In June this year, it swelled 19% to touch $55.8bn, and the trade deficit with China alone widened to $14.2bn. America is fast becoming a country of consumers -- an inverted iceberg; a mountain standing on its peak – and sooner rather than later – the structure will collapse like a house of cards. The immense implication US has on the global economy ensures that such a catastrophe will force the entire world into a recession.

No doubt, Outsourcing and national security are two of the most hotly debated issues leading up to the November US Presidential elections. The Democrat candidate, John Kerry, has openly opposed shipping of American jobs overseas, terming such managers as “Benedict Arnold CEOs”.

Now let us consider what outcome outsourcing has on India.

First of all, the work that is reaching India is of preposterously low quality. Silicon Valley companies are based on “know what”, i.e., they know the market, they know the technologies, and they know what products to make to earn money. Bangalore’s “coolie valley companies” are based on “know how”. They do run-of-the-mill software coding for Silicon Valley companies that have the “know what”. Indian companies typically have negligible investments in Research & Development, and specialize in “Reverse Engineering”. It has so polluted the blood of Indian engineers that there are hardly any “new and exciting” products coming out of India.

More important is that the jobs can dematerialize as fast as they have come. It will not be long before other countries will start offering the same services at cheaper rates, and the US Corporations, who have no long term investments here unlike in China, will only be too happy to move the jobs again.

Just have a look at what we have to give up in return for these favours. We have to open up our agricultural, dairy and other “conventional” sectors. This will spell doom for 250 million agricultural workers and cultivators. And please note that this does not include others who depend on agriculture indirectly. How will the 90 million households who haven’t seen electricity benefit from the high-tech revolution? How will the 123 million households which have never seen the insides of a bank benefit if Morgan Stanley decides to get its back-office work done in India?

We can find innumerable such paradoxes which go on to prove that the “trickle-down” theory will probably not work. Indian needs elimination of poverty and not elimination of the poor, as has been proved in the recently concluded General Elections. No benefits of outsourcing reach the poor. In the words of Issac Arun Selva, publisher of ‘Slum Jagathu’ a magazine by slum-dwellers in Bangalore, “Forget about support from the IT industry, they don’t want us around.”

The fact is that outsourcing is based on the loathsome primitive instinct called “greed”. It is the greed of the US Corporations that has brought these jobs to India, and it is greed that can take them away. Thomas Adams summed it up beautifully when he said, “The covetous man pines in plenty, like Tantalus up to the chin in water, and yet thirsty.” Let us pledge to have nothing to do with this greed. Let us vow to stop outsourcing, since we will only get entangled in the web of avarice. Thank you.

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"I have a dream" --- only when i'm sleepin'