Browse by year:
The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Outsourcing: The necessary evil

Balaji Gadicharla
Friday, October 7, 2011
Balaji Gadicharla
We see people pick on companies that outsource their IT or engineering operations to countries like India and China, particularly during these turbulent days of unemployment. But on closer observation, it appears to be the right thing to do for the benefit of economy in the long run.

Let us see the supply side of things to begin with.

In order to perform most of the jobs that are being outsourced or being taken by an H1B foreign worker, the minimum qualification is an undergraduate degree or equivalent in technical subjects like mathematics, engineering, architecture, physical sciences, biotechnology etc. If we were to have prevented such huge numbers of outsourcing, we should have churned out increasing US born graduates with technical degrees from our own universities. Unfortunately, since the days of early digital revolution during 70s, nothing dramatic happened in the enrolment figures of US citizens in technical disciplines. As an example, even as late as in 2006, according to NSF, the foreign student population earned approximately 36 percent of doctorate degrees in science and 63 percent in engineering! And these dismal figures continue to haunt us even today. Walk into any university’s technical departments and you see mostly foreign students of Indian or Chinese origin. Until this trend changes, our dependency on foreign talent will not stop.

Employees who come on H1B visa to work for a couple of years are the ones who did not use our free K-12 public schooling system, would not qualify for “in-state” tuition in college regardless of the number of years in the U.S., would pay for Social security and Medicare taxes like any other U.S. citizen though most likely they would never avail these benefits, neither were they beneficiaries of any economic incentives sponsored by the government and yet from day one of their arrival at the airport, they suddenly become tax payers of every dollar that they earn and thus contributing to the U.S. economy. With the passage of time, these foreign workers proved to be credible enough that it made more sense to have these employees work in their own land wherein the costs were much lower. And no businessman would shun from an increased profit margin! We all want our stock portfolio to perform outstanding and we constantly push the CEOs of the companies to relentlessly deliver better results quarter after quarter. So it should be no surprise that behind every point earned, there could be an element of outsourcing involved.

And even if the same job could be filled in by a qualified American somewhere in Arizona, the hiring managers would not take time to walk that extra mile to pick needle from a haystack. They would rather count on a huge talent pool ready to rock on the other side of the planet to fill in their next position. Hypothetically speaking, even if we were to ban all outsourcing and have everything homegrown, the costs of production would be so high that our wallets are not used to. Be prepared to shell out three to four times to what you are paying now for a piece of “Made Only in the USA” software or that sleek “All-American” PC that caught your attention the other day. Sooner or later, we would then lose our market share to foreign made products ultimately leading to the closure of our companies. So whatever jobs we are still assured of today for the US citizens, like in sales, product management, marketing etc, will also be unavailable.

Share on Twitter
Share on LinkedIn
Share on facebook