Monday, September 21, 2009

India and the Outsourcing Controversy

In doing this week's readings, I found Elizabeth Hanson's discussion of India in Chapter 5, "Information Revolution, Global Economy, and Wealth" specifically her focus on offshore outsourcing. The importance of outsourcing cannot be ignored, especially in today's struggling economy and in the undeniable shift to economic globalization.

Like many of us, I have had the experience of calling a customer service line and getting computer help from someone sitting in a call center in India. My experience was pleasant: the service rep was polite, knew what my computer issue was, and spoke very good English. Even so, however, I wondered why American companies had to outsource those customer service jobs in the first place. Weren't there enough people who needed jobs here in the United States? This was a few years ago, when the controversy over outsourcing had reached a loud uproar. After the 2004 elections, that uproar seemed to die down a bit, but it resurfaced during the 2008 election cycle. I remember hearing both candidates promise to get more jobs to the U.S. instead of outsourcing to countries like India. While that was a noble intention on their part, I believe, after reading Hanson, that outsourcing is inevitable in today's globalizing economy, and certainly has its positive points. Because of advances in fiber-optic cable, many office tasks and Internet functions can be moved to countries where labor and infrastructure are much more affordable. Companies can also get more work done in a day thanks to time zone differences--Americans can pass on projects to their Indian counterparts to finish when they go home for the day and vice versa. Customer service lines are also open for additional hours--a good thing when your printer decides to start spewing paper everywhere at 11:00 PM, as you're trying to print a paper for class the next morning. (Not that this has happened to me. No. Of course not!) All in all, according to Hanson, costs are cut up to 40 percent between lower salaries and cheaper infrastructure. Especially in this economy, large American companies need to save where and when they can.

A secondary benefit of outsourcing is, of course, the jobs created for Indian IT professionals. The technology field is extremely lucrative in India because of this, and many talented young graduates are able to enter the workforce each year thanks to American outsourcing. I don't, however, believe that providing jobs in India should be the main objective of U.S. companies thinking of outsourcing. But it is an integral part of the new global economy, and providing jobs in a developing country, that will cost less than comparative positions in the U.S., is inarguably beneficial to both the company and those that get the jobs.

I think outsourcing will remain a contentious subject in years to come, especially as India's role in the world economy continues to grow. Hanson's treatment of outsourcing presents both sides of the argument, but ultimately argues (rightly, I think) that it is essential in moving the economy towards greater efficiency and productivity as we go into the second decade of the 21st century.

1 comment:

  1. Christina,

    I have progressed outside of my blogosphere because I saw your title from Professor Hayden's mainpage and was interested to read your thoughts on Hanson's argument regarding outsourcing.

    I agree full-heartedly with you in your analysis of India's current place in the international outsourcing arena. A book that I read last year details the outsourcing process and explains how it is being taken to a new level both by corporations and individuals. Tim Ferriss's "Four Hour Work Week" explains in detail the advantages of outsourcing work to India all in the name of improving efficiency and focusing our energy on things that warrant the most focus. Ferriss strongly advocates the use of a "virtual assistant" to handle all mundane, low level tasks that come across the table from day to day and, almost always, this virtual assistant is Indian. He also concludes that people who have outsourced are genuinely more pleased with the product based on both Indian knowledge of business (As Hanson touched on) and the Indian work ethic.

    I think that Ferriss can be exemplified as an early adopter to this integrated world framework that will consume our future. As a capitalist society, we want the most for our money in the least amount of time and, in this case, India offers a wonderful option. As you conclude, international outsourcing will not only continue to grow but will prove essential in increasing efficiency in the coming years.