The economics of offshore outsourcing

News Analysis

Last spring the television show, “The West Wing,” came very close to portraying reality. In that episode, a trade pact negotiated by a presidential aide allowed a U.S. tech company to “offshore” 17,000 jobs to India. The Communications Workers of America (CWA) was even in the story, fighting the runaway jobs. In the episode, the president agonized over the deal. In the real world, the Bush administration praises offshoring and fights anyone who tries to stop it.

The Times of India has quoted U.S. Trade Representative Robert Zoellick saying Washington is against any attempt by state governments to legislate a ban on outsourcing. In February of this year, N. Gregory Mankiw, chairman of President Bush’s Council of Economic Advisors, said, “Outsourcing is just a new way of doing international trade. … And that’s a good thing.”

Also, according to the Asia Times, more than 100 call-center executives were handling Bush’s campaign from the Indian outsourcing hubs of Noida and Gurgaon, which adjoin the national capital, Delhi.

In short, George W. Bush doesn’t lose any sleep over jobs being offshored. But does that mean Indian and other foreign workers are the problem? Absolutely not.

“Corporate-led globalization is about capital reducing its costs and increasing its profits by eliminating its responsibilities to labor and society,” said Anannya Bhattacharjee of Jobs with Justice/New Trade Union Initiative of India (NTUI) project.

“Outsourcing of jobs, for example, is about capital moving to areas where wages are lower, be it areas of a particular country where union density is low or to other countries where wages are lower.”

So, is offshoring a necessity for U.S. corporations to stay competitive in a global economy? No, not really. For example, Microsoft has begun offshoring its most advanced jobs — software engineers and developers, hardware engineers, technical writers, project managers and web developers. Microsoft now employs nearly 2,000 workers in India, double the 970 it previously acknowledged, as shown in internal company documents obtained by WashTech News, which is the voice of the Washington Alliance of Technology Workers, part of CWA.

But does Microsoft have any real competition? For those who have followed the anti-monopoly lawsuits against Bill Gates’ company the answer is quite obvious: Microsoft, for all intents and purposes, has no competition. The reason Microsoft is offshoring high-paying jobs to India and other lower-wage countries is the same reason a large section of manufacturing has left the United States for Mexico and beyond — greed.

A study by Forrester Research predicts that U.S. companies will transfer 3.3 million service jobs overseas by 2015, compared with just 102,000 jobs shifted in 2000. The majority of these jobs will be people who work with computers.

Bhattacharjee said her organization is planning a tour of a few NTUI representatives in the United States. Both Jobs with Justice and NTUI believe that in order to build a movement today to challenge rampant global corporate power, “we need to build alliances not just among unions, but also with other social movements and build a broad base of power among those that are facing the same challenges,” she said.

Bhattacharjee continued: “In a workshop sponsored by WashTech, NTUI, and others at the World Social Forum in Mumbai, India last January, one core principle identified was that of reciprocity between trade unions. … Workers across the world need opportunities to develop meaningful relationships so that their struggles are informed by an understanding of each others’ challenges. Opposition to weakening of labor rights can only come from a strong trade union movement.”

The author is vice president of WashTech. He can be reached at commiett@yahoo.com.