To go back a couple of decades, America advocated what it called Globalization and more market for its companies. Her argument was that you get better service when you open up the competition, which is quite right and there was no better example than herself. The World started opening up. American companies found new markets and learned new market techniques that helped them survive in price-sensitive markets. And they also discovered that they can earn more if they can move jobs overseas where labor is available in plenty and for a pittance. More low-quality jobs started moving overseas. American companies started making more money. Then come some foreign companies who wanted to do the same and get a share of the new ‘flattened’ world. It is still fine because American companies were still able to make money by moving jobs away.
Is outsourcing really bad? No. In an open economy, it helps companies to make the best product at the lowest service. They make more money for the American economy and the American people who are the majority share-holders. It helps American companies to spend more money on R & D. It frees up talent from spending time on low-quality jobs.
Outsourcing in turn also creates wealth for the ‘outsourcee’ too! A wealthy country means a better market for the high-quality products that American companies make. A new market that can afford to buy the expensive products that America can sell. Outsourcing is not all bad.
And India is definitely not bad! Foreign companies are among the top employers in US and they make a substantial proportion of products being exported out of this country. (http://www.forbes.com/2008/04/10/foreign-investment-stocks-2000global08-biz-cx_do_0410investments.html) And with rise of India’s economic power (fueled heavily by US), India’s investment in the US has increased by nearly 54%. (http://newdelhi.usembassy.gov/pr110610a.html) The Tata and Essar groups employ more than 25,000 between themselves. And there are numerous examples of Indian FDI saving millions of jobs, not only in the US but also in the UK and rest of Europe. Remember Jaguar, Land Rover and Corus Steels. Indian investment has created 60,000 jobs between 2004 and 2009, according to the ‘How America benefits from economic engagement with India’ report released by the University oF Maryland, Md, USA. Economics is never been a one-way street. And definitely not in this case. And to think Mr. Obama of all people should take up this issue in a big way is hard to understand. But the 2010 electoral results give you some hint.
PS. And this week, Jaguar Land Rover posted a positive revenues after being acquired by Tata.