The outsourcing work an Unfair Victim of the US 2004 Elections
Election fever is gripped many countries in the year 2004. Besides Malaysia, countries that held either Presidential or General Elections include the United States, Indonesia, the Philippines, and India.
In the US Presidential elections, the issue of jobs emerged as a hot topic.
This was because over two million jobs had been reported lost since President Bush took office more than seven years ago.
Unfortunately, the developing countries became a convenient target for presidential candidates in decrying the causes of job losses as most US companies are now outsourcing work overseas.
For years, developing countries were blamed for taking away factory jobs as US manufacturing companies invested abroad.
The presidential salvo in respect of the white-collar sector, with the complaints reaching fever-pitch that US companies are “outsourcing” jobs involving services such as computer software design, call centers (replying to phone enquiries made to companies and airlines), and accountancy.
With the internet revolution, it is now possible and cheaper for companies in rich countries to hire people in poorer countries to undertake many office tasks.
For example, US tax consultancy firms are contracting out part of their business to Indian firms, whose accountants are sent the tax data of the clients of the US company through the internet.
The Indian accountants fill in the data on tax forms and send them back to the US firm. The US accountancy firm saves a lot of money as it pays the Indian accountants much less than it would have to pay accountants in the US.
In another case, a European airline company diverts the calls it receives in Europe (for enquiries or even booking tickets) to a Third World country, where trained personnel armed with the latest information make replies and bookings.
This relocation of work functions can boost jobs and incomes in developing countries. According to one report, some 400,000 American service jobs have moved overseas since 2000. Another report predicted that by the end of 2004, information technology and back-office work in India would have grown five times, providing 4 million jobs.
However during the US 2004 elections there was a strong backlash in the increasing use of outsourcing companies. During the campaign for the Democratic presidential candidate, outsourcing was a big issue.
According to Nayan Chanda of the Yale Centre for the Study of Globalisation, the eventual winner, John Kerry, even called US firms that outsourced their jobs “Benedict Arnold companies”, after the most despised traitor of the American war of independence.
Kerry said he would, as President, require the administration to collect data of jobs sent abroad and have them reported annually to Congress.
In several states, laws discouraging out-sourcing have been introduced. The US Senate itself has even considered banning the outsourcing of government-funded projects.
We can expect that such protectionism will get more nasty by the next election year, and there will be more measures proposed to prevent business being contracted out to the developing world.
Such measures would inevitably prevent developing countries from receiving a potentially important source of growth and jobs. This solution would be categorically unfair.
The Facts and Statistics of outsourcing work...Read More
US 2004 Electoral Backlash on the Outsourcing of Jobs: Chanda’s Solution...Read More
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