Keeping up his tirade against outsourcing, US President Barack Obama said on Saturday that firms shipping jobs off shores should be denied tax breaks if manufacturing is to be brought back to America and employment is to be raised.
Speaking in his weekly radio address to the nation, Mr. Obama said all tax benefits should go to companies that produce jobs inside the country.
He said such a move is essential to not only bring back jobs to the United States but also make manufacturing in America competitive.
“No company should get a tax break for outsourcing jobs. Instead, tax breaks should go to manufacturers who set up shop here at home. Bigger tax breaks should go to high-tech manufacturers who create the jobs of the future,” Mr. Obama said.
Mr. Obama has for long campaigned against outsourcing of jobs, something that would hit Indian companies hard.
Mr. Obama’s increasing pitch is indication enough that the issue might become a hot topic in the run-up to November polls.
The aftermath of the economic crisis has seen the current of opinion against outsourcing grow in the US.
In fact, a bipartisan bill has been tabled in the US House of Representatives to make companies that move call centres overseas ineligible for grants or guaranteed loans from the federal government, a move aimed at stemming the tide of jobs heading to nations like India.
The Indian IT sector, which gets 60 per cent of its export revenue from the US, has come out strongly against US moves to stop outsourcing.
Addressing Americans from the Boeing Plant in Everett, Washington State, Mr. Obama described how the government can support businesses like Boeing, which is hiring thousands of Americans across the country, through steps like removing tax breaks for companies that send jobs overseas and giving them to companies that create jobs at home.
“I’m speaking to you this week from the Boeing Plant in Everett, Washington. Boeing has been in this community for half a century. But it’s what they’re doing here today that has folks really excited; because at this plant they’re building the plane of the future - the Dreamliner,” Mr. Obama said.
“It’s an impressive sight. And, to be honest, part of why I came was to see it up close. But I also came because this is a great example of how we can bring jobs and manufacturing back to America,” he said.
Air India has also placed orders for Dreamliner. In fact one of the Dreamliner with Air India logo was there at the Boeing facility when Mr. Obama visited it yesterday.
Mr. Obama said new technology has made businesses more efficient and productive - and that’s good - but it’s also made a lot of jobs obsolete.
“But that doesn’t mean we have to settle for a lesser future. I don’t accept that idea. In America, there’s always something we can do to create new jobs and new manufacturing and new security for the middle-class. In America, we don’t give up, we get up,” he asserted.
“Right now, that’s exactly what we’re doing. Over the past 23 months, businesses have created 3.7 million new jobs. And manufacturers are hiring for the first time since the 1990s. It’s now getting more expensive to do business in places like China.
“Meanwhile, America is more productive than ever. And companies like Boeing are realising that even when we can’t make things cheaper than China, we can make things better. That’s how we’re going to compete globally,” Mr. Obama said.
Mr. Obama said Boeing’s business right now is booming. Last year, orders for commercial aircraft rose by more than 50 per cent. To meet that rising demand, they’ve put thousands of folks to work all over the country, he said.
The United States, he said, needs to strengthen American manufacturing. “We need to invest in American-made energy and new skills for American workers. And above all, we need to renew the values that have always made this country great: Hard work. Fair play. Shared responsibility,” he said.
Keywords: US Economy, Job security, Productivity, Outsourcing, IT companies, Tax break, Barack Obama
Since outsourcing is all about cheap labor and if/when the cost at the
currently outsourced location becomes an issue, then the companies
would most likely find another source of cheap labor rather than bring
back the jobs, because the cost in USA is still higher. Most of the
manufacturing jobs that were lost to China are yet to make their way
back to USA ! It is ironic that Americans take pride in claiming that capitalism succeeded and communism/socialism/protected markets failed etc but
also crib when the jobs are sent overseas. It is the same capitalistic
policies that lead to such job loss. Indians aren't thinking that certain jobs are low value jobs. It is the American Corporate leaders who used such characterization while exporting jobs overseas, so that they could make money at the cost of their fellow citizens.
Indians are creating jobs for themselves, with or without outsourcing,
Indians will continue to work. But if jobs are sent their way they
would do take it too !
I love the responses to this debate. First off, the jobs will go back from where they come. No one seems to have pride in creating jobs here in India, for Indians. To say that the US or Europe will hurt itself if it wants its jobs back, is the usual knee jerk reaction. Your reader S V Nagappa wrote about the conditions under which the Indian software industry operated. This shows how Indian companies exploit Indian labor, lining their pockets,with no regard to the welfare of their employees. This is exploitation of Indians by Indian software companies. Need I say more? Before outsourcing began, Americans used to do the same work that Indians now do. I have seen their dedication, first hand. For someone who is hurt by the jobs going back, this is hard to understand and agree with.Rather than rhetoric, let us stop importing goods from the US, as a retaliation. Let us see if it hurts us or them. Who knows, we may make point here?
Time has come for us to start venturing out and find ourselves a
better place. We are rich in resources and brains. So why not we
become the manufacturers and get our own people to work? In fact, we
can draw an inspiration from the words of the American President and
implement that in India in a faster pace. If only all responsible
Indians and politicians take a joint effort to eradicate the
corruption, we are sure to have the finance, market, resources and
talents - all in one capsule to make our country far better than
looking for some outsourcing jobs from the west.
Hats off to the well written article by PTI. Long live Indo-US amity!
It is high time for India to become self reliant and tech might just be
the starting point, the chief raw material, skill, is available in great
abundance here. However, as in any industry, sudden changes would lead to
problems, both for the US and for India. What I would like to see is a
highly politicized bill, by senators none take seriously, that receives
massive media attention. It would allow us to move into the changes
without much negative reaction.
Outsourcing is not all about cheap labour, there are some other factors driving companies in US to outsource like dedication towards work, which Indians and Chinese are good when compared to people from other countries.
Obama's action on outsourcing is nothing but a protectionism measure. He is trying to reduce imports(mostly from India) and make that job happen in US itself. Let us take an example of Boeing-What if Air India had not ordered planes from Boeing and ordered them from a local manufacturer(hypothetical) in India to increase jobs in India?US or any other country should go slow on taking such protectionism measures. If all the countries in the world take protectionism measures trade between countries will drastically come down and unemployment will raise all over the world.
Mr. Obama forgets that an Indian software engineer is avialable for a wage rate of $4.5 per hour while the minimum wage in the US is over $6. A cleaner in the west gets in one week what a software coder in India gets in a month. However where the US has missed the point is that the workforce in India is treated as cheap labour as the workforce is exploited. A software coder does not get over time to work over 8 hours they dont get 5 day week they nearly have to work 7 days and then there is age discrimination in all Indian companies as they only employ those who are 35 or below and openly say that to the employees. In the west especially in the US where declaring ones gender marital status is not allowed in application. it is clearly high level of breach of labour laws in India. If Obama wants to return jobs he should stipulate that all Indian companies to whom work is outsourced should give overtime to employees and allow over 35s and pay wages and accomodation when overseas.
I find Mr. Lakshminarayanan's comments amusing. He is getting
confused between values like patriotism, and business decisions. No
one is talking about patriotism. It's simply a business strategy.
Indians carry the idea that manufacturing or service sector jobs are
"low end jobs that Americans will not take". This is absolutely wrong. A janitor takes as much pride in his work, as the CEO of a fortune 500
company in the US. Unlike India, where there are barriers of caste, they both get the same equal respect in society.
The bottom line is this: Outsourcing is all about cheap labor. When the difference in cost between hiring someone in India, or locally, is getting smaller, it makes sense to bring back the jobs. Indians may not accept this, but that's the right thing to do, for someone who lives in the US. Why can't Indians create jobs for themselves, like the earlier reader asked? Isn't that an act of "Patriotism"?
If Americans stop outsourcing they loose the upper hand in providing
quality product without increasing price. Its known to all, the labour
cost in america is expensive. So the american products price will go up,
and rest of the world produces better quality products with less cost.
Examples would be, how the car companies from Japan and Korea eating the
market share of American car companies. No one can go back, now world is
a local market.
American politicians too, are opportunistic. When the going was good,
the "cheap labor" was required and Americans did only "high value"
jobs. Now that the economy is in doldrums, they want the jobs back.
Is it true that the American government was actually providing tax
breaks for sending jobs outside the country ? Now the President says
"no more". I guess the American people too are just as clueless as
their counterparts everywhere else!
American corporations will do anything to increase their profits. Only
American Citizens are required to be patriotic, not the American
Companies or their shareholders!
I know how your readers will react to this, but I am grateful that you
do not play to the galleries, like some newspapers in India do.
Born in India, I migrated to the west many years ago. I remember the
good old days, and the ones after that - of the "Y2K scare", when
"Outsourcing" , "body shopping" & "globalization" became buzzwords.
It created millions of jobs in third world countries like India, Philippines, China & Mexico. It brought prosperity to some in these
countries. However, house prices, rents & cost of living shot up,
beyond the reach of many people.
For us, to expect that we get the jobs back, is simply a matter of
logic. All the jobs won't return. That said, outsourcing is nothing
but a glamorized term for cheap labor. It is high time, companies
create jobs for their own countries, instead of depending on the west.
Is that not a matter of pride, & character?
Doing that would be better than griping about Barack Obama being the
"anti-outsourcing president".
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