The Impact of a Changing Political and Economic Environment on Outsourcing

Since the early stages of the 2008 political campaigns in the United States, outsourcing stood out as a controversial and politicized topic. Politicians voiced their concern over outsourcing and its adverse impact of moving jobs to foreign destinations. According to Alsbridge research, over 80 percent of the business process outsourcing and call centers in India are owned or controlled by U.S. companies. Naturally, regulation leaning toward discouragement or even an outright ban of outsourcing would be devastating to the industry and local foreign economies.

However, as the election campaign moved on, remarks that were voiced against offshoring/ outsourcing started getting milder. Even the strongest opposing voices started saying, “Outsourcing to India and China is irreversible,” which brought relief to millions of call center and BPO employees. However, the mood and sentiments changed again during the last leg of the campaign and various measures like tax benefits and incentives were promised for the industries not opting for outsourcing. The growing rate of unemployment in the United States is most definitely concerning to everyone, but the million dollar question that still remains unanswered is, “Will outsourcing be banned?”

The majority of experts feel that the “anti-outsourcing” message is well-received by the public during electoral campaigns, but putting these words into action may not be all that simple. Ganesh Natrajan, the chairman of the National Association of Software and Services Companies, says, “We should not worry about any ban on outsourcing, as it is just not going to happen. Incentives to job creation in America will be helpful in retaining jobs in America, but it should not have any adverse impact on [the] outsourcing industry.” Another way of looking at this situation is to answer some simple questions. Can America afford to lose billions of dollars they save every year from outsourcing jobs to foreign destinations? Will anyone take such a step that will hit the American economy the most during this precarious time of global meltdown?

American business understands the importance of outsourcing to the American and global economy and the level of cost relief provided by information technology, information technology enabled services and BPO sectors. The bottom line continues to be the same – in order to remain competitive, the American industry must continue to migrate repetitive and non-core functions offshore while continuing to innovate and grow the core businesses.

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