The Hype of Outsourcing Ban in the US

Very recently there is a heated debate going on in the USA and in India Inc too about the proposed ‘IT Outsourcing Ban’. This week only, Ohio in the US has banned outsourcing of jobs to countries like India for government departments. There is much hype being generated in the US, accusing Indian IT companies of ‘stealing’ jobs out of the hands of the Americans. I remember the current US president Barack Obama promising the ban during his political campaign and even after his election he has constantly spoken against outsourcing. In his recent move, he increased the visa fee immensely, affecting the profitability of Indian IT companies which send a lot of professionals to the US for onshore jobs. Now almost whole lot of Indian IT companies are opposing this ‘protectionism’ by the American government. (We also remember that at one time the US stood against protectionism in the business world and promoted developing economies to open-up!)
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Here, I have done a quick analysis. Let us see if Indian IT companies really come anywhere nearby the US behemoths:
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Revenue:
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IBM $103.630 billion (2009)
Microsoft $62.484 billion (2010)
Oracle Corp $26.82 billion (2010)
TCS $6.52 billion (2010)
Wipro $6.03 billion (March 2010)
Infosys $4.59 billion (2010)
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Data taken from Wikipedia articles of the respective companies.
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As is clear from the above tabling that the top three Indian IT companies don’t even make a mere 9% of the revenue of their top US counterparts!
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May be comparing the employment data would throw some relevant light; as the US political sphere is more concerned about the job losses than the revenues.
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Employees:
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IBM 399,409 (2009)
Microsoft 89,000 (2010)
Oracle Corp 105,000
TCS 160,429
Wipro 112,925 (June 2010)
Infosys 114,822 (2010)
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Data taken from Wikipedia articles of the respective companies.
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The data tells that the top 3 Indian IT companies employ about 65% of the employee base of their US counterparts; though the data doesn’t discriminate between employment in home countries and employment in BUs abroad. Let us see the populations of the two countries:
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Population:
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USA 310,216,000 (2010 estimate)
India 1,185,863,000 (2010 estimate)
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Data taken from Wikipedia articles of the respective countries.
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We see that the population of India is 3.8 times the population of the US! That makes it so evident that the responsibility and urgency of new job creations in India is not at all less important than in the US!
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The analysis makes it clear that while top-3 Indian IT firms make only less than 9% in revenue and employ only 65% of people resources as compared to the US; India’s population which is about 4 times that of the US tilts the case of ‘protectionism’ in India’s favor. It comes that it should be India which should be doing ‘protectionism’ not the US! Though I believe ‘protectionism’ is a matter of political ethics and no country should indulge in it unfairly.
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In my opinion, outsourcing ban or outsourcing job-losses has been made a debate in the US for political reasons. An example of the same was made evident in the Ohio ban; since Indian IT companies do very little work for the government departments anyway which the ban was intended to curb! The financial crisis which spread in 2008 was more due to some fundamental flaws in the US economic model than any ‘outside’ threat like India or China. And until the Americans address these core and real issues, the financial and economic crisis can’t be fixed by an outsourcing ban!
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- Rahul

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