Article: Is It Possible? Outsourcing to the United States?
August 27, 2010 Leave a comment
Bhasin, CEO of Indian outsourcing giant Genpact said he will move jobs to America because high US unemployment is pushing wage rates below that of what he’s having to pay in India.
To unemployed Americans, the announcement may be welcome news. But Ron Shah of Geena Ventures, an India-centric private equity firm, is concerned. The jobs being sent back to America, he said, are low skill and pay around minimum wage. Meanwhile, the US continues to outsource high margin, high intellectual property work to places like India, where a technology-friendly base has been built.
These jobs are being sent back to America for cost advantage, so there will be no sustainable boost to US employment, Shah argued. Historically, high margin work has been the strength of the US economy, he said. High margin work has been America’s “bread and butter” and Shah has “issues” with those jobs being exported.
Steve Cortes of Veracruz said the announcement is a “testimony to the efficacy of free markets that the rising tide lifts all boats.” This first helped American shareholders, he said, because companies were able to outsource jobs to more cost efficient places, like India. As a result, India’s middle class grows and that increases demand for the amount of American products that can be exported there, he said.
Watch the video<http://www.cnbc.com/id/15840232/?video=1569389046&play=1> to see the full segment.