Without even considering the typical American hipocrasy of banning outsourcing while trumpetting for the free market economy, let us first analyze how this is proposed to be achieved.
Obama said he is trying to change a tax rule whereby the companies outsourcing their jobs will loose the tax break which will be given to the companies creating jobs within America.
Come on, can someone as talented as Mr. Obama seriously think, that companies outsource their jobs ONLY to get some tax cuts? The money that these companies save in salaries and capital expenditures for the outsourced posts far outweighs the tax break gains.
And what about the talent pool? Though the outsourcing originally started with cheap labour in mind, now it has moved much beyond that. IT Jobs are outsourced to India because of the vast pool of educated and experienced professionals. That is why big American giants like Motorola, IBM or GE are opening more and more R&D center in Bangalore. They're not just investing in cheaply laboured support or call center.
Experienced Indian brain is no longer cheap; Some multinational biggies pay to some of its prized engineers in Banglore more than what it pays to their engineers in similar positions in Europe. They do crib about it, but can not help investing more in R&D centers in India as it cannot ignore the vast talent pool and the work quality.
Cutting the tax breaks for the outsourcing companies will just be a political gimmick which may even work with ignorant American voters; but the actual remedy is much more complex and time consuming.
If Obama is really serious in tackling the issue then America should invest in serious education. Scrapping the teaching of Creationism can be a good start! And this would be a long term project without much hope for immediate effect on the ballot boxes.
The outsourcing companies will even find ways to get arround this tax break rule. For example, they can form subsidiaries in other countries. That'll not amount to outsourcing and hence the rule will not be applicable to them. I'm sure qualified tax lawyers can find many more elegant solutions!
Anybody with the knowledge of the industry knows it. That is why neither the American companies nor their Indian suppliers are worried much. All they have to do is come up with some new arrangements and tax consultants will walk happy to their banks.
Indian share market is running all time high, profit of the IT companies are increasing and they're hiring more than ever. No one is unduly perturbed.
In capitalism, if anything is good for the companies (capitalists) and bad for the masses then that will prevail. Profit is the almighty here which American people, in general, claim to support wholeheartedly.
Outsourcing is here to stay, not because it is bad for America, not because it is good for India, simply because it is the way the capitalism works.
4 comments:
Hat's off Blogger. You penned a voice and We waited long for such a pen.
Waiting for more such posts! -Debjani
You need to get your facts from a more round-out selection of news outlets. You are mistaken. US companies outsource these jobs simply because it is cheaper than using American labor.
Creationism is not taught in schools in the US. The Creationism idea is spread through churches. The mandated curriculum is Evolution.
Post a Comment