U.S. Offshoring Of Jobs And Businesses To India: A Survey And Analysis

Abstract

Recently, offshore-outsourcing of U.S. jobs in general and particularly to India has drawn considerable attention from various quarters in the U.S. A combination of factors have propelled this issue to the forefront: ominous headlines; downsizing of corporate labor force; huge trade deficits, increased global competition; poor job growth in a healthy economy; loss of white-collar and professional jobs, etc. The trend of jobs outsourced to India is projected to be sharply upward in the near future. India has clearly benefited from the influx of new jobs. It has also brought some cultural changes in the younger generation in India not well received by the local communities. However, the overall cultural understanding between India and the U.S. has certainly improved. The study finds that the U.S. businesses have many compelling reasons in outsourcing jobs to India: cost savings due to wage differentials; decreasing need for capital investment; availability of educated and skilled workforce, etc. The offshore-outsourcing also has many disadvantages: loss of security; increased dependency; huge startup and communication costs; inadequate protection of intellectual property; poor infrastructure; different legal systems; high levels of bureaucracy and corruption, etc. As the economic theories suggest, the authors find that, given the current competitive global business environment, offshore-outsourcing is an essential part of sound business decisions that U.S. corporations need to make to remain economically viable in the long-run. The short-run problem of displaced workers, although highly important, should be addressed in ways other than imposing trade restrictions, or isolating U.S. from world competition.