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What Others Think About Outsourcing |
| Published On: 01-24-2005 |
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A large number of corporations have been outsourcing jobs to foreign countries for efficiency seeking purposes and have been doing so at an increasing rate. India has proven itself to be the largest player in the outsourcing game, as foreign companies are attracted to the high quality and cheap cost of the Indian labor force. China has also emerged as a competing recipient of outsourced jobs. The excerpts below were taken from the editorial sections of some Asian and European newspapers:
The Times of India, “Wrong Call”, November 25, 2004
“The Left has lost the plot. It wants to unionize the business process outsourcing (BPO) industry and undermine its chief advantage — cheap wages relative to the rest of the world. BPOs [Business Process Outsourcing], or IT-enabled services, employ an estimated 300,000 people, who work happily for roughly a tenth of what their counterparts earn in the US. Even so, their wages in India are rising due to the growth of BPO units, with the average employee earning a respectable five-figure salary, or 10 times India’s per capita income. As for working conditions, there is no reason to believe that BPOs are worse than other occupations. It should, however, realize that unionism will kill the goose that lays the golden eggs. BPOs, unlike the insular factories of yesteryear where the Left has its unions, are a truly globalized business.”
The Economic Times of India, “TUs plan a visit to Uncle Sam, outsourcing tops agenda”, November 30, 2004, http://economictimes.indiatimes.com/articleshow/940404.cms
“Less than a month after the US Presidential elections, when candidates traded accusations about being ‘Bangalored’ and jobs moving out to other countries, a delegation of Indian labor leaders is touring nine major US cities.”
“While there is no discounting the fact that the outsourcing boom has created jobs for graduates who may otherwise have been unemployed, the NTUI [New Trade Union Initiative] believes it is important for industry to ensure better, sustainable jobs.”
Akshaya Bhargava, MD & CEO of Progeon, The Economic Times of India, “BPOs: fast track or slow coach?”, November 15, 2004,
"Personally, everything that I have learnt about BPO in the past two years has led me to believe that it would be an enormous mistake to think of BPO as a short-term career option.
Look at the facts and cold, hard numbers. The BPO industry is about 240,000 people strong today. The industry is growing at around 50% per annum. If we believe that this growth rate will continue for the next four years (a crucial assumption), this industry will double every two years — i.e. by ’08, it will employ a million people.
With a million employees, at least 30% will have to be supervisors and managers. This means that the industry will demand 300,000 supervisors and managers. This is 30% more than the entire industry today.
Put differently, this means that every single individual in the BPO industry today can become a supervisor within four years and the industry will still need more people."
The Times of India, “Outsourcing a byword for backwardness”, August 28. 2004 http://timesofindia.indiatimes.com/articleshow/829974.cms
“…the shots are always called to maximize benefits for the outsourcer at the expense of the outsourcee, who remains a second class economic entity. Before popping the BPO bubbly, spare a thought for the morning after — and the hangover that it will certainly bring.”
The Economic Times of India, “Indian IT Firms Court Europe and Japan”, January 12, 2005
“Uncle Sam may soon lose its favorite whipping boy--the Indian IT industry. Given the public outcry against outsourcing and potential legislation in the US, Indian IT companies are now looking at virgin territories like Europe and Asia-Pacific.”
“Public sentiment against outsourcing aside, studies by Forrester Research reveal that American companies are under increasing pressure to curb outsourcing to developing countries, irrespective of the cost of labor.”
China Daily, “Outsourcing in the limelight”, October 20, 2003 http://www.chinadaily.com.cn/en/doc/2003-10/20/content_273760.htm
“China has the potential not only to pull in a huge amount of outsourcing revenue from the United States but can also offer opportunities for US outsourcing service providers, say industrial executives.”
“While many US companies still give most of their software outsourcing projects to Indian firms and ignore Chinese businesses due to language and legal barriers, they are starting to pay more attention to China.”
China Daily, “Restrictions not the Answer”, February 25, 2004, http://www.chinadaily.com.cn/english/doc/2004-02/25/content_309061.htm
“Erecting trade barricades will not solve the US problem of job losses. It will only affect the utility efficiency of its capital and labor resources and block American consumers from access to inexpensive products.
To help solve the problem, professional training that helps workers better cope with international competition is needed.”
Michiyo Nakamoto, Financial Times, “How to Turn the Tables on Outsourcing”, January 6, 2005
“Not so long ago, Japan seemed destined to lose its preeminent place as the world’s factory for electronic goods.”
“Recently, however, there has been a growing reappraisal of the country’s potential as a manufacturing base. Companies such as Canon and Sharp have shown that it is possible to reap impressive profits while maintaining production in Japan if such production requires high technical or manufacturing expertise.”
“In Malaysia it took 22 workers to make one portable mini-disc player but in Yamagata [Japan] the same job requires only seven workers and, at a pinch, this can be reduced to just four.”
Ashley Seager, The Guardian (London), “Europe sends the most jobs offshore”, January 15, 2005
“The US and UK tend to be the biggest offshorers because of the global dominance of the English language, although Germany is rapidly increasing its use of offshoring. Its share of the international total leapt to 12.5% last year from just 4% the year before.
Consultancy McKinsey has carried out a study showing every dollar's worth of business offshored from the US or UK creates $ 1.45-$ 1.47 of value. Of this, the UK or US derives $ 1.12-$ 1.14 while 33 cents worth goes to the recipient country.
That is because the US or British firm doing the offshoring benefits from higher profits which are then ploughed back into new kinds of activity, creating new jobs. Consumers in the host country benefit from lower prices and, in theory at least, from the creation of new, high-value, jobs.”
The Nikkei Weekly (Japan), “Malaysia taps 'IT town' as lure for outsourcing”, December 27, 2004
“Malaysia has good infrastructure and a pleasant living environment, plus great language capabilities on account of it being a multiethnic nation, explained Scicom CEO Leo Ariyanayakam.”
“It is these attributes that the government of Malaysia is now purposely cultivating and marketing to attract foreign companies to the new, information technology-based society that is being created in what used to be the manufacturing base of Southeast Asia.”
The International Herald Tribune, “France woos India, and its markets; High-level visit aims to tap vast potential”, December 7, 2004
“India has been a beacon of democracy and stability in a region where both remain the exception. It is the world's second most populous nation, after China, and a declared nuclear power, like Pakistan. India also has had an annual economic growth rate averaging 6 percent over the past decade.
According to Goldman Sachs, India will become the world's third-largest national economy by the middle of the century, after China and the United States, driven by its successful software and pharmaceutical sectors.”
“As the ninth largest foreign investor in India, France ranks well behind the United States, Britain and Germany.” |
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