How justified is it for the US to blame outsourcing as a reason for job-losses? Is it over-hyped?

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With the advent in globalization, the developed countries always gaze at cheap labour sources. And, what better place there can be than our very own India? In an era when jobs are increasingly becoming difficult to find and the US unemployment rates are appearing at sky-scraping altitudes, our BPOs are facing the brunt of the US citizens and government. This is a time where public outrage is also at an all time high courtesy economic recession and the techies are not giving a second thought before bashing and blaming the Indian BPOs for their unemployment reasons.

Experts know that the anger is misdirected and could result in further worsening of their own situation until and unless guided properly. Some also say that US techies lack knowledge and guts when they compare themselves with poor people who just get 1/6 ^th of their remuneration. It would also be myopic of them to implement protectionist policies and keep the jobs in their own country, the result of which would make them further uncompetitive and lead to their failure.

The world is keeping a close eye on the policies of the new US President Obama and his response towards the Indian BPO industry. There have been many serious backlashes in the recent past which were much more serious than expected and under any circumstances should not be termed publicity gimmicks. US Senator John Edwards publicly expresses his thoughts by stating "Employment creation should be the top priority of any administration. US are particularly concerned about it as unemployment of educated people is intolerable".

There have been recent comments in the public by some of the top officials in the BPO industry which shows their concerns towards the problem. The Business Process Industry Association of India (BPIAI) President Samir Chopra said, "The economic slowdown in the US and other developed countries could lead large scale job losses in India". The aftermath of such an event's scenario was brought into light when Praveen Sengar, Head of Software, Services Industry vertical at IDC said, "The slowdown would adversely impact expansion plans of the industry as new clients would taken longer to sign up. Such a slowdown will result in consolidation and enhance diversification from non-core activities".

But, there have been some contrary statements made too. NASSCOM, the Indian software and BPO industry body said, "The business process outsourcing sector is not in the danger of losing jobs due
to the ongoing economic downturn rather a net hirer in the current fiscal". NASSCOM's Associate President Deepak Ohlyan further said, "The future of the Indian BPO industry is safe. The sector has no plans for job cuts. In fact, the BPOs require more people to scale up their operations. The sector will continue to contribute around 2.5 per cent to India's GDP. There is no need to panic as things will settle down".

The economists have played a good role in understanding the fact by undertaking proper researches that there has been a very minuscule loss. IMF reports said, "A worker could lose his/her job due to outsourcing, but may later find a job in another firm within the broader industry classification. Hence, they conclude that there are no net job losses when there is sufficient job creation in another sector, which indeed seems to be the case".

There have been ample evidences to prove a lot of irrelevant finger pointing done at the Indian BPO industry, but most of it has been baseless accusations. This has made the scenario more overhyped than it could have possibly been. The learning lies in understanding of the fact that there has to be a proper investigation behind a happening to determine the correct reasons. The outcome of all this would be the yearn for services will be the main drive for managers, techies and developers. The recession would change the mindset and the focus would be on highly skilled professionals and not much on cheap labour and cost advantage.

As Techdirt says, the two trends which will emerge are as -

1. Companies will find that they went too far in outsourcing certain job.

2. New jobs will begin to open up in the US as well.

Therefore, it is high time that the west stops complaining and blaming India for the situation. Instead, it should focus on creation of new job opportunities, highly skilled tech professionals and revival of the economy.