point
Menu
Magazines
Browse by year:
Cutting Through The Fog
Romi Mahajan
Saturday, January 31, 2004
If one lives in the industrialized world and is literate, one has by now read enough about the phenomenon of jobs being outsourced to India—enough by way of volume that is, but far too little by way of real, accurate analysis. After reading the next 1000 words, you won't have to look further to be able to cut through the fog of obfuscation and nationalist nonsense being proffered by a sad band of racists and protectionist conservatives who say that “our” jobs are being stolen by Indians.

Luckily for me, someone else has already provided enormous crispness and clarity to the argument. In a recent column in the Guardian, political analyst George Monbiot argues that the flow of services jobs from Britain to India is a sort of “historical restitution” and that, ultimately, the jobs Britain stole from India during hundreds of years of rapacious colonialism are returning to the country of rightful ownership.

British colonialism devastated the Indian economy; many argue that the Industrial Revolution took place in Britain and was made possible by the wholesale destruction of India’s burgeoning manufacturing base and by the conversion of the Indian economy to a peripheral supplier of raw materials to feed the booming industrial metropolis ruled by London. The logic of colonial extraction was and is insidious-Indians supplied raw materials to Britain and then had to pay handsomely for the finished goods made in the mother-ship and re-exported to India. All the while, India itself was kept out of the industrial process of value-addition by the exercise of military and political might. The colonized have their place at the low end of the value-chain, in a static model that leads to destitution while the colonizer reaps the benefits of vast supplies of cheap inputs.

Economics is largely a set of relative-not absolute-parameters. For one place to industrialize and be rich, another has to be relegated to economic immaturity and poverty. That’s simply how it works.

Well, the serpent has bitten its own tail—Monbiot argues that “there is a profound historical irony here. Indian workers can outcompete British workers today because Britain smashed their ability to compete in the past.” The British forces Indians to learn English, to adopt their system of education, government, their modes of business—all of which give India a degree of comparative advantage. But easily the most important factor of all is that Britain made India a poor country and in a poor country, the same job gets met with far less compensation. The fact that India is poor (India is what the big thinkers call a “low wage destination”) means that it can compete effectively with the U.S. and EU since the primary parameter of competitiveness is cost. If India has been left to develop on its own, we might not be home to call-centers and BPO outposts. We might be at the core of technological innovation and industrial maturity.

When one examines the macro picture, therefore, it is hard to shed tears when one reads about jobs being outsourced to India. A country whose peoples’ present and future was made so indelibly worse by the same process that created wild prosperity elsewhere is finally getting a small fraction of its due. For anyone who cares about global economic justice, the argument above should be compelling; for those who refuse to recede from their hardened racist and nationalist positions (who call themselves free-trade but are the most anti-trade folks I have ever come across), it’s time to get off the soapbox and learn some history.

Okay that part of the argument is done, but I am not finished.

For as much as I believe, along with George Monbiot, that there is a process of restitution afoot, I am NOT a believer in outsourcing. I am in fact in many ways dead set against it. The topic is complex so I'll give you only two reasons.

Reason One: Outsourcing severs the commitment that companies should make to those that work in their offices and factories and pits workers against each other. In addition, outsourcing—the motivations for which spring from considerations of cost—pits developing countries against each other as they vie for work from industrialized countries. Worker A in the U.S. loses his job to worker B in India and blames worker B for stealing his job instead of his own company for being footloose and uncommitted to him as an employee. Country A develops skills to service the Triad (U.S.-E.U.-Japan) only to lose out completely to Country B which develops similar skills at a cheaper rate (which almost always translates directly into paying less to workers for the same work.) Thus, outsourcing leads to dissolution of the bond between employees and between developing countries and, even worse, pits them against each other in a continuous game of one-upsmanship to determine who can be the best servant to the developed world.

Reason Two: Outsourcing, like the economic model of colonialism, stunts the long-term and sustainable development of the country - in this case India-that is putatively supposed to be gaining a great deal. When we do outsourced work, we are doing the work of others for a fee. The gains and comparative advantage are conferred to them, not us. We don’t develop products of our own, new technologies of our own, and don't work to develop a domestic market. We service others and neglect ourselves. Yes we create pockets of enormous wealth but in the end we are exporting the one last thing we could hold on to- our intellectual resources.

At a micro-level, I have nothing to say but “congratulations” to a young person in India who has been able to make a great life processing checks for Deluxe Corporation, answering calls for American Express, or writing code to improve the performance of Cisco routers. At a macro-level, I want for us all to collectively enter a discussion about the long-term good of the working people of India, and the world. Unfortunately, as in most of economic life, the gains of one people come at the expense of another people who can hardly afford it. And whereas I rejoice that some redistributive justice has come to our shores, I believe there is much work left to do.
But given that, I suggest you tell the next person who complains about “our” jobs being sent to India to simply shut up.

They were really our jobs to begin with.

Romi Mahajan is a Lead Marketing Manager at Microsoft. Educated at UC Berkeley and UT Austin, he has written extensively on the geo-politics of technology. He can be reached at romi@romimahajan.com.
Twitter
Share on LinkedIn
facebook