Forbes and The Washington Post have stories out that Reuters will now outsource some 20 jobs to Bangalore, India.
“The journalists will be responsible for compiling tables, writing short research alerts based on analyst reports, and polling analysts for earnings forecasts.”
While on the one hand I feel that Indians ought to be getting into a diverse set of professions, this back-office type of work may not be such a great idea for any of the parties involved. For one, where will the buck stop when things go awry? Who will fall off this money-tree? I am just afraid that the Indians who sign up will end up getting the short end of the stick; not only will their salaries be lower than their counterparts but they have to also bear the brunt of whimsical fiscal cycles in a country where there are no unemployment benefits. Based on the bottom line, Reuters and others may feel free to hire and fire people, but the jolt to our society will come at much too great a cost. Yes, I know in this case we are talking of “only” 20 jobs. While 20 jobs may not stall an economy, this relationship between Western capitalist interests and South Asians needs to be reexamined.
Didn't the British come looking for cheaper resources and eventually colonize much of South Asia? While it may be politically incorrect to say so, isn't the current model of doing business just an avatar of colonization? I am curious to know when we (South Asians) will get off our asses and create a uniquely South Asian model for doing business. Right now it appears all too dictated from the West and that spells trouble. The dependence on an outside entity is always dubious.
It might be appropriate to also point out a July 5 article in The New Yorker that addresses the issues surrounding outsourcing from the perspective of a young tech-worker in Chennai, India.
Prashant – I know you are off to India for a bit, but when you read this, please feel free to comment. And, Vinod, too. I would love to know what percent of India's economy is dependent on this outsourcing business model (I suspect it is quite small).
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vinod says
heh ;-)
FIRST – India’s GNP = $3Trillion
Total Outsourcing market in ’03 = $1.3Billion.
So, outsourcing = 0.04% of India total GNP. A drop in the bucket. By comparison, India’s other exports (farm products, textiles, etc.) = $57Billion
SECOND – there’s a different theme in your post which I consider one of the most significant, and yet unseen political divides – are the Rules of Capitalism Natural or Arbitrary?
If you believe they are Arbitrary, then you argue that the West sorta invented the “current” rules and uses its power to “impose” them on others and ensure success for itself (hence it’s a form of colonization).
On the other hand, if you believe they are Natural (or “Tragic”), then you argue that the West “discovered” them, either created a culture or had an a priori culture that best recognized these rules. And as a result, the West is powerful relative to cultures that don’t know how to play by those rules as well. There are things that suck about capitalism for sure (recessions, bankruptcies, unemployment, pointy haired bosses, etc.) but they are intrinsic, tragic aspects of nature – not some weird creation by the West.
That’s not to say that other cultures can’t adopt capitalism (Japan, china, etc.) – but they’ll end up adopting at least some structures that mimic the West (stock markets, trading companies, imports, exports, cultural diffusion, etc.)
Clearly, I’m of the “Natural” school – for ex., in this post where I take on Arundhati Roy who’s definitely of the Aribtrary school –
As a member of the “Natural” school, I think what’s going on in India w/ outsourcing is FANTASTIC and simply look at the alternatives these workers had prior to Back Office work as primafacie evidence that the world is going in a good direction…
Ok… I won’t chew up anymore of your comments space ;-)
vinod says
heh ;-)
FIRST – India’s GNP = $3Trillion
Total Outsourcing market in ’03 = $1.3Billion.
So, outsourcing = 0.04% of India total GNP. A drop in the bucket. By comparison, India’s other exports (farm products, textiles, etc.) = $57Billion
SECOND – there’s a different theme in your post which I consider one of the most significant, and yet unseen political divides – are the Rules of Capitalism Natural or Arbitrary?
If you believe they are Arbitrary, then you argue that the West sorta invented the “current” rules and uses its power to “impose” them on others and ensure success for itself (hence it’s a form of colonization).
On the other hand, if you believe they are Natural (or “Tragic”), then you argue that the West “discovered” them, either created a culture or had an a priori culture that best recognized these rules. And as a result, the West is powerful relative to cultures that don’t know how to play by those rules as well. There are things that suck about capitalism for sure (recessions, bankruptcies, unemployment, pointy haired bosses, etc.) but they are intrinsic, tragic aspects of nature – not some weird creation by the West.
That’s not to say that other cultures can’t adopt capitalism (Japan, china, etc.) – but they’ll end up adopting at least some structures that mimic the West (stock markets, trading companies, imports, exports, cultural diffusion, etc.)
Clearly, I’m of the “Natural” school – for ex., in this post where I take on Arundhati Roy who’s definitely of the Aribtrary school –
As a member of the “Natural” school, I think what’s going on in India w/ outsourcing is FANTASTIC and simply look at the alternatives these workers had prior to Back Office work as primafacie evidence that the world is going in a good direction…
Ok… I won’t chew up anymore of your comments space ;-)
Sepia Mutiny says
Comments re: Capitalism & Outsourcing @ Tiffinbox
FYI – some of you may be interested in some comments I left over @ Seshu’s Tiffinbox blog re: Outsourcing & Capitalism. The comments are perhaps a tad overly political vs. the type of stuff I’d generally post here but I thought it may b…
Sepia Mutiny says
Comments re: Capitalism & Outsourcing @ Tiffinbox
FYI – some of you may be interested in some comments I left over @ Seshu’s Tiffinbox blog re: Outsourcing & Capitalism. The comments are perhaps a tad overly political vs. the type of stuff I’d generally post here but I thought it may b…
Sepia Mutiny says
Comments re: Capitalism & Outsourcing @ Tiffinbox
FYI – some of you may be interested in comments I left over @ Seshu’s Tiffinbox blog re: Outsourcing & Capitalism. The comments are perhaps a tad overly political vs. the type of stuff I’d generally post here but I thought it may be of …
Sepia Mutiny says
Comments re: Capitalism & Outsourcing @ Tiffinbox
FYI – some of you may be interested in comments I left over @ Seshu’s Tiffinbox blog re: Outsourcing & Capitalism. The comments are perhaps a tad overly political vs. the type of stuff I’d generally post here but I thought it may be of …
Walker says
FIRST – India’s GNP = $3Trillion
Total Outsourcing market in ’03 = $1.3Billion.
That GDP figure is using the purchasing power parity method. The outsourcing figure is according to current exchange rates. India’s GDP by the exchange rate method is $600 billion –http://en.wikipedia.org/wiki/Gross_domestic_product, so outsourcing would then be 0.2% of GDP. I can’t access the link but that outsourcing figure seems very lowball also. Software exports alone amounted to $12.5 billion this past year — http://www.informationweek.com/showArticle.jhtml?articleID=21401198 — a lot of these exports fall under the outsourcing category. So outsourcing makes a small but nontrivial contribution to the Indian economy, but it’s growing.
Switching topics — if there were a crunch why would Reuters layoff its Indian staffers? All things being equal, they would be more likely to layoff their more expensive labor. Media organization are less sensitive to economic cycles than others, so in the particular case of Reuters there is no reason to worry on that account anyway.
Walker says
FIRST – India’s GNP = $3Trillion
Total Outsourcing market in ’03 = $1.3Billion.
That GDP figure is using the purchasing power parity method. The outsourcing figure is according to current exchange rates. India’s GDP by the exchange rate method is $600 billion –http://en.wikipedia.org/wiki/Gross_domestic_product, so outsourcing would then be 0.2% of GDP. I can’t access the link but that outsourcing figure seems very lowball also. Software exports alone amounted to $12.5 billion this past year — http://www.informationweek.com/showArticle.jhtml?articleID=21401198 — a lot of these exports fall under the outsourcing category. So outsourcing makes a small but nontrivial contribution to the Indian economy, but it’s growing.
Switching topics — if there were a crunch why would Reuters layoff its Indian staffers? All things being equal, they would be more likely to layoff their more expensive labor. Media organization are less sensitive to economic cycles than others, so in the particular case of Reuters there is no reason to worry on that account anyway.
Seshu says
Walker,
“Media organization are less sensitive to economic cycles than others, so in the particular case of Reuters there is no reason to worry on that account anyway.”
I know you are stating this in relative terms, but given the political pressures mixed with economic realities, Reuters and others are more likely to bolt from a “foreign” liability than drop their guard back home. I know what you are saying is quite sane – that it is more likely that companies will abandon their more expensive overhead (i.e. labor at home versus labor abroad), but does it always work that way? Can you name some companies that do that or have done that? (kept its foreign labor in full force but cut its home-based labor)
Thanks!
Seshu says
Walker,
“Media organization are less sensitive to economic cycles than others, so in the particular case of Reuters there is no reason to worry on that account anyway.”
I know you are stating this in relative terms, but given the political pressures mixed with economic realities, Reuters and others are more likely to bolt from a “foreign” liability than drop their guard back home. I know what you are saying is quite sane – that it is more likely that companies will abandon their more expensive overhead (i.e. labor at home versus labor abroad), but does it always work that way? Can you name some companies that do that or have done that? (kept its foreign labor in full force but cut its home-based labor)
Thanks!
Walker says
Putting aside the 20 employees at Reuters, the liklihood of a pullout for purely economic reasons by firms outsourcing or offshoring in India is hard to fathom. The outsourcing trend started (or at least accelerated) in a downturn afterall. In the politics there is a bit more uncertainty.
In the U.S., a radical shift in politics would be required to cause a out and out pullback. The U.S. public is trending slightly more toward economic nationalism, but this has hardly registered among the “Washington Consensus” movers and shakers as of yet. If and when it does, there will be at most a decelaration of the overall trend — perhaps certain activities will not be allowed to be outsourced on the grounds of privacy concerns, national defense or whatnot, perhaps some incentives will be placed in front of firms not to outsource — slowing it down a bit.
I think you are right to be wary of thinking of outsourcing as a pillar of the Indian economy in the long-term, but hopefully the skills, expertise, and capital acquired can be used to bolster domestic industry on more solid footing. For one, there is no reason why India can’t be the center of the world’s software industry — building products from the ground up. Some of this new wealth can also be leveraged to support progress in manufacturing.
Walker says
Putting aside the 20 employees at Reuters, the liklihood of a pullout for purely economic reasons by firms outsourcing or offshoring in India is hard to fathom. The outsourcing trend started (or at least accelerated) in a downturn afterall. In the politics there is a bit more uncertainty.
In the U.S., a radical shift in politics would be required to cause a out and out pullback. The U.S. public is trending slightly more toward economic nationalism, but this has hardly registered among the “Washington Consensus” movers and shakers as of yet. If and when it does, there will be at most a decelaration of the overall trend — perhaps certain activities will not be allowed to be outsourced on the grounds of privacy concerns, national defense or whatnot, perhaps some incentives will be placed in front of firms not to outsource — slowing it down a bit.
I think you are right to be wary of thinking of outsourcing as a pillar of the Indian economy in the long-term, but hopefully the skills, expertise, and capital acquired can be used to bolster domestic industry on more solid footing. For one, there is no reason why India can’t be the center of the world’s software industry — building products from the ground up. Some of this new wealth can also be leveraged to support progress in manufacturing.