Obama Says Offshoring Fears Are Unwarranted

alphadogg writes "The perception that Indian call centers and back office operations cost US jobs is an old stereotype that ignores today's reality that two-way trade between the US and India is helping create jobs and raise the standard of living in both countries, US President Barack Obama told a gathering of business executives in Mumbai on Saturday. President Obama's remarks come after some moves in the US that had Indian outsourcers worried that the US may get protectionist in the wake of job losses in the country. The state of Ohio, for example, banned earlier this year the expenditure of public funds for offshore purposes. US exports to India have quadrupled in recent years, and currently support tens of thousands of manufacturing jobs in the US, he said in a speech that was also streamed live. In addition, there are jobs supported by exports to India of agriculture products, travel and education services. President Obama, who is in India on a three-day visit, said that more than 20 deals worth about $10 billion were announced on the first day of his visit."

Comments

Re:Of course it ignores today's reality.

[Bloodwine]

I am a software developer and I was hired for my current job to bring back all development from India. I was tasked with bringing all development back in-house because the offshore projects were behind schedule and suspect quality, not to mention the communication issues.

What we do now is do a combination of in-house development and rural sourcing, which is hiring U.S. developers in the midwest and midsouth in areas of lower cost of living. They are more expensive than offshore developers, but much cheaper than developers in major cities and these rural developers are in the same timezone.

I think you will see more and more rural sourcing cutting in to the offshoring of jobs. I don't think there will ever be a full reversal of offshoring jobs, just that rural sourcing will become more and more viable and desirable.

yeah right

[bartok]

"Create job abd raise the standard of living in both countries".

This statement is only true if you count the rich getting richer in the US. I fail to see how losing your middle class income job to outsourcing raises your stadard of living.

Re:yeah right

[Rakarra]

Because, while some jobs leave our country, goods made in their country are cheaper. If shipping a job to India lowers the average wage here by 10% but the price of goods goes down by 20%, that's a net gain.

Only past a certain level. If someone is right on the line and the wage lowering pushes them below the poverty line, it's a great blow to standard of living, as they can't afford those goods anymore, even at a low price.

Basic expenses, food, electricity, gas, even rents in most areas have not, and do not, as a trend, go down. There is a certain minimum that is required, and if wages go below that point, then that person is screwed. Oh, a new TV or a new car cost 20% less now? That's great, except they can barely make rent.

So you have an expanding upper class, an expanding lower class, and a contracting middle class.

Re:I think he is mostly right

[mrnobo1024]

The developing world will keep developing and net flows of capital and standards of living are going to flow from more developed to less developed.

If I live in a more developed country, why the fuck should I tolerate this? Being a sovereign nation means having the ability to regulate trade up to and including stopping it completely. Since, as you freely admit, foreign trade is utterly screwing us over, that sounds like a pretty good idea right now.

India Trade Deficit: $4-12BILLION Annually

[Doc Ruby]

The US trade deficit with India is already over $7B this year through August; heading to top $10B this year. That will be among the highest annual deficits, though Bush/Cheney got deficits as high as $12B+. August 2009 saw the only monthly trade surplus with India in well over 20 years, $34 million; the rest of the months total to something like a quarter $TRILLION more spent on India than India spent on the US. It's obvious that the parallel growth in the US and India leaves the US with less money from our jobs and more money in India for its jobs.

Of course, the corporate profits on all those jobs are not counted in trade stats. The real competition isn't between US labor vs Indian labor. It's between labor in either country, and the corporate owners who run the system, keeping the profits among themselves and their banker partners.

Re:Outsourcing just sucks

[Anonymous Coward]

It's a disaster, it's always been a disaster. Managers get their bonus based on cost savings regardless of how much it wrecks their company in the mid-long term.

Re:I think he is mostly right

[Kjella]

The rest of the world is evolving rapidly into highly educated, highly industrialized, highly technological countries that resemble the west - in certain parts and certain ways, anyway. The more similar their productivity is, the more similar standards of living they can demand but for a long time a series of favorable conditions and network effects have kept the US in a solid lead. The balance is shifting, but to say that it actually flows from one country to the other is fairly misleading. You could halt trade but it wouldn't halt these countries from modernizing, and they would also retaliate.

The US currently has a very negative trade balance, meaning it imports far more than it exports. If it were to close the borders, the US would hurt the most. Medium to long term that could mean opportunity for domestic industry, but the short term would be a substantial drop in the standard of living as many goods become expensive or even unavailable. There was a time when a trade boycott with the US would be dire but today if you can maintain trade with the EU, Japan, China, India, Taiwan, Russia and so on most countries would do fine. Alternate suppliers of almost everything now exist outside the US.

In short, the US is no longer in a position where they would have anything to gain from going protectionist. They'd be their own little isolated market of 300 million people while the world market - even subtracting the billions that are too poor to really participate - is much larger and would simply outpace the US. That's the nastier parts of the free market, once you've let it loose you might in the end become the victim of it, having to adjust your wages and standard of living to fight for jobs just like everyone else. But if there's one country that has no right to complain, it would be the US...

Re:Obama is not the Great Leader that many wish hi

[Johnny Mnemonic]

Explain to me the effective differences in terms of actual fiscal policy between modern Democrats and Republicans.

When the GOP demonizes "tax and spend" as the other party's problem, they mean "spend on domestic social programs" and deliberately exclude US military spending. I think that's a pretty accurate summary, actually.

When you include US military spending as part of "spend", you will find that the GOP is worse on "tax and spend" than the Dems. They started a war that costs the US $1B a day, that has lasted 8 years, and provided no way to pay for it. That is a more egregious "tax and spend" program than any social program the Dems have initiated, "Obamacare" included.

If the GOP proposes a balanced budget that included the military budget and preserving Social Security, they'd be worth listening too. I expect that if they fail to produce an actual budget like that, they will again be voted out in 2012.

OTOH, if they do produce such a budget, Christ, I'll vote for them myself.

Re:So how do you like your fraud?

[kennykb]

Just where in India, China or Russia are you finding folks who can do Fourier-domain image processing on hardware microarchitecture? I could use a few, and don't much care if they're American, Chinese, Indian, Russian, or beings from Aldebaran IV with green and purple feathers. Incidentally, I don't think that people like that are getting any rarer: we've always been few and far between. But the code monkeys are getting commoner, and the slushpile of CV's gets bigger and bigger with only the same few really promising candidates buried under all the others. (Summary: I'm an American, MSEE/PhDCS, and *can* do all the things you mention. I'm also, uhm, on the high side of fifty, quite expensive, and not in the market at the moment because I've had no trouble finding customers.