India’s chief finance minister may have made calls to the heads of IBM and several other large US tech companies to tell them that the huge developing nation was hemorrhaging a high end tech jobs. The call happened, looking at the statistics from India, it would be easy to see that the costs of outsourcing technology work to firms based on the dropping. The unions and members of Congress spent a great deal of time complaining about the number of the US jobs that is being sent abroad.
The issue seems to have receded recently, the recession has deepened and large American companies that have been able to export them. The economy losing about 600,000 jobs a month, the need for the efficiency though outsourcing has become less immediate. The outsourcing may be making a big comeback as word leaked that IBM would cut about 5,000 jobs in the US and move the work to India. The beginning of a new wave of exporting of American jobs to developing countries which have a large pools of well-educated workers. At a rate of 7 percent, India’s GDP grew for the last two years. The rate is expected to move down sharply due to the recession. The central government has the goal of continuing the growth rate, it enjoyed until lat year. Throughout the balance of the developing and developed the world it will be nearly impossible for the government to meet those goals.
The cost of labor in India which was already below the US, it is likely to be falling even faster than it is in the US. In India, the outsourcing business has been hit with a sharp drop in demand and the major Indian employers in the sector are doing poorly. The India’s outsourcing giant WiPro was recently posted mediocare financial results. While the labor prices drop in the US, they are probably dropping faster in the countries like India and China. The India’s official unemployment rate is 8.2 percent although it is expected to rise throughout the balance of the year. The IBM clearly arbitrage the joblessness in the US and India as it made its decision about where to emply the several thousand people. The IBM is looking for the equivalent of the lowest cost bidder.
If the recession goes on for a long time, the IBM move may be a precedent for other US companies who need to staff essential positions. It could be easily take a hundreds of thousands of American people out of work and more jobs will be sent abroad. Outsourcing is a trend nowadays, it has many benefits wherein people grab the benefits of outsourcing.
REFERENCE:
http://www.time.com/time/business/article/0,8599,1887779,00.html
http://www.daylife.com/article/02276fqaIu2tU
