Bush's Pro-India Stance Shows He's Got The Facts Right About Outsourcing - InformationWeek

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IT Leadership // IT Strategy
Commentary
2/23/2006
09:55 AM
Paul McDougall
Paul McDougall
Commentary
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Bush's Pro-India Stance Shows He's Got The Facts Right About Outsourcing

Legislative efforts to restrict the outsourcing of IT and other services jobs to India would hurt America more than they would help it. Most business people and economists know this, and it appears President Bush knows it, too.

Legislative efforts to restrict the outsourcing of IT and other services jobs to India would hurt America more than they would help it. Most business people and economists know this, and it appears President Bush knows it, too.Amidst all the hyperbole about the so-called ruinous effects of offshoring, it's easy to forget that the U.S. enjoys a significant trade surplus in services with India--$1.8 billion, to be exact. "India is now one of the fastest growing markets for American exports, and the growing economic ties between our two nations are making American companies more competitive in the global marketplace," Bush said Wednesday in a speech to the Asia Society in Washington, D.C. In other words, a trade war with India is one of the last things America wants or needs.

Fueled in part by income earned working for American tech companies, India's emerging middle class is spending its newfound wealth on the kind of products and services that are familiar to most of us: pizzas from Pizza Hut, washing machines from General Electric, computers from Dell. "India's consumers associate American brands with quality and value, and this trade is creating opportunities here at home," Bush said.

The president also gave a nod to India's growing R&D prowess and how it can help U.S. manufacturers get an edge on their competitors. "Texas Instruments is a good example," said Bush, noting that the company's research center in Bangalore brings "additional brainpower to help solve problems, and provides executives in the United States with critical information about the needs of their consumers and customers overseas."

Bush is enough of a realist to know that all of these benefits come at the cost of a number of U.S. jobs, but it's a relatively small number and thus a small price to pay for market access to the world's largest democracy. "It's true that a number of Americans have lost jobs because companies have shifted jobs to India. And losing a job is traumatic," Bush said. But the answer, he rightly added, is not protectionism: "It makes sense to respond with educational policies to make sure that our workers are skilled for the jobs of the 21st century."

That is, we're better off identifying the high-growth, high-value opportunities that lie ahead, rather than trying to hang on to work that's been commoditized by technology and the global dispersion of knowledge to low-cost countries.

Critics of offshore outsourcing will surely take issue with Bush's pro-India stance. They'll say it's just one more example of how the president is out of touch with the views and needs of average Americans. In fact, Bush's speech indicates that he's not about to cave in to self-serving, protectionist calls from labor groups and their allies in Congress who refuse to accept that globalization is here to stay and that it's a game you can't win without playing.

The fact that joblessness in the U.S. continues to plummet shows Bush is on the right track, and that's something for which all American workers should be thankful.

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