The Hindu Business Line : US chamber clears outsourcing `myths'

IN the name of good economics, politicians, the world over, often play bad politics. And in this, the US is no exception as, with the presidential elections nearing, it is now becoming clear that the backlash against business process outsourcing (BPO) is based not on facts but emotions and politics.

As the debate over trade, jobs and the sourcing of work overseas has been unfolding, generating "more heat than light", the US Chamber of Commerce has come out with a special report to allay fears of job losses at home by shedding more light on the issues and put the records straight. In particular, the chamber is "struck by how infrequently solid facts have been brought into the discussion."

In the wake of over 80 bills that have been introduced in some 30 states and the Congress to punish companies who source to India and elsewhere, the US chamber has been leading the fight to preserve "for our companies the freedom and flexibility to source and trade around the world." And this, "we are doing so," stated the Chamber President & CEO, Mr Thomas J. Donohue, "because it is good for the American economy and American jobs - and we are very pleased that India is in a position to benefit by providing these services."

Towards this effort, the chamber's report titled `Jobs, trade, sourcing and the future of the American workforce' attempts to lay out in a logical fashion "what we know and don't know about the extent of and reasons for recent US job losses, as well as the links between employment, trade and worldwide sourcing."

Analysing the various issues at length, the US chamber's report concludes that first, increases in productivity, the recent economic downturn, domestic business impediments and continued uncertainty are the primary reasons for recent job losses and the slow pace of hiring - not the movement of work offshore.

Second, even with job losses in manufacturing and some service occupations, more Americans are working today than at any time in history. More than half a million pay-roll jobs have been created so far this year.

Third, even the experts do not know precisely how many US jobs have been or will be sourced overseas. Yet, under any estimate or forecast, these jobs amount to a small fraction of the nation's 138 million workforce.

Fourth, more white-collar office work is shipped from other countries to the US than it ships overseas. When it comes to trade in services, "insourcing" beats "outsourcing" by nearly $ 60 billion annually.

Fifth, media reports and political rhetoric aside, the nation's knowledge workers have not lost significant job opportunities to foreign competitors. The jobless rate among Americans with a four-year college degree is just 2.9 per cent.

Sixth, the recent extension of worldwide sourcing from manufacturing to white-collar IT jobs does not threaten America's technological leadership - yet its serious slippage in education and broadband application does.

Seventh, by 2010, America will not have a shortage of jobs, but rather a shortage of workers. The US must expand the pool of available workers through education, training, immigration, and flexible workplaces in order to generate sufficient economic growth and the necessary tax base to support the coming avalanche of retirees.

Eighth, to create jobs, it is critical that America remains open to the worldwide economy - where 95 per cent of its potential customers live. Isolationist measures designed to restrict trade and punish companies for sourcing must be defeated.

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