Storm in a thimble

"Politicians can’t outsource the vote," says Scott Kirwin,
founder of the Wilming-ton, Delaware-based lobbying group Informa-tion
Technology Professionals Association of America.

It is nice to know that election years are the same in all democracies.
Incumbent govern-ments do their best to pander to mass feelings when election
time draws near. So the Americans pass laws to protect jobs–and we reduce
duties, lower taxes and generally recognize that the way individuals see
economic progress and security is not always the same as the way governments see
them. And if that vicarious pleasure was not enough, one also gets a sense of
smug satis-faction when the Americans crib about job losses and the need to
protect their own.

For years we have been told the virtues of opening up our economy to the rest
of the world and let competition thrive. We were reluctant to do so–not all
the reasons were right–but finally have started moving in that direction. Now
that the Americans face some of these challenges–rather small ones–it is
kind of nice. It is wrong–but nice things are often wrong.

But why is this a small problem? The great Indian outsourcing industry will
employ 152,000 people in 2003-04 as per NASSCOM. Assuming that even two thirds
of this–100,000–was a job loss in the US, it is small numbers for an economy
where, the unemployment rate is running at 6-7 percent–that is 8.4 million
people in Dec 2003. What that means is that Indian companies are ‘stealing’
just about one percent of the jobs. The real issue therefore for the US is
unemployment and not off shoring. The problem therefore will diminish only when
jobs start reappearing in the US economy. And if that does not happen, President
Bush would see the weapons of mass destruction, that were not found in Iraq,
appearing in the US, in the form of disgruntled voters.

There are calculations that prove that when jobs go out, they create more
jobs due to higher efficiencies. There are reports that Indian companies do not
only steal jobs–they also create them by hiring locally in many cases. That is
a lot of work for a thimble-sized industry–and that too for two percent of its
business pros-pects. The reaction is clearly disproportionately related to the
cause.

The present movements may be small by GDP standards, but you are still
talking about 152,000 people. And many more going forward. The the-ory is that
as the lower end jobs get moved out, their place is taken by up the value chain
jobs and eventually people graduate to these and live happily till the next job
churn happens. That is perfectly acceptable and correct. Therefore logically,
what the US government should be doing is creating situations where such
transi-tions can be made as painless as possible. That means creation of new
types of jobs and making people ready for them. So far one has not heard
anything about this. No one seems to be articulating the need for this. Even if
all off shoring were to halt (which is just about impossible) would that solve
the problems of employment and growth for the US economy?

To my mind even these job migration is not the end of the story. It sort of
assumes that low-end jobs move out and high-end jobs move in. And as a recent
article in ‘Wired’ would seem to suggest, the movement out of low-end
services jobs would unleash forces that will create high-end ‘creative’
jobs. The article assumes that off shor-ing destinations are good enough for
low-end jobs only. And people skills there are not suitable for up-the-
value-chain-jobs. The differences in people abilities are small and rapidly
disappear-ing. There are likely to be more ‘creative’ people in India than
the US and Europe put together. And technology makes it possible for them to
work from anywhere. And efficient corporations would try and get the best people
for their work–regardless of the place of physical being. The churn will not
be limited to one category of jobs. Many vocations will get moved around. That
is the reality that a globalizing world has to come to terms with. In the
meantime, we can debate about the storm in a thimble.

Shyam Malhotra is the Editor-in-Chief of
CyberMedia publications.