Today's blog comes from Peter Allen, Partner and Managing Director, TPI.
Despite some of the election-fueled rhetoric in the U.S., the global outsourcing industry cannot be legislated away. It is an essential component of corporate strategies for competitiveness and America depends upon the availability of a strong and growing outsourcing industry.
That said, there are certain measures suggested during the recent presidential campaign that might impact the use of outsourcing among U.S.-based corporations. To prevent the "offshoring of American jobs", the Obama camp frequently mentioned removal of tax benefits for US companies that outsource.
We view this notion to be impractical to implement. First of all, much of the outsourcing industry is domestic-based and even the India-based outsourcing companies are active employers domestically. More importantly, the global footprint of so many U.S.-based firms makes the imposition of such restrictions counter-competitive and actually restrictive of their ability to export goods to emerging markets.
There's also been mention of restrictions on visa issuances - Indian companies use H1-B and L1 visas to send their personnel to the U.S. In our experience, the U.S.-based educational infrastructure is simply not producing the volume of skilled workers required to service the needs of major corporations. Rather than build restrictions on importing talent, we should be encouraging this as a means of building the global bridges with economies that will be consumers of our products.
There's also talk about regulations demanding that outsourced work employ a fixed percentage of Americans. Such restrictions on the employment practices of the industry service providers are inherently anti-competitive. Market forces, that is, buying tendencies of major U.S. corporations should dictate labor composition.
The recessionary markets are compelling corporations to take actions to realign their cost structures in order to enhance their long-term viability. Business must carry forward using sound principles of economic viability. In some cases, outsourcing deals may get broken down to smaller pieces as clients may be averse to announcing mega outsourcing deals. After all, no one wants media attention right now for "outsourcing jobs".
We think this is a unique opportunity for the Obama administration to embrace and enhance America's position as a bilateral participant in a recovering global economy. Ironically, it's also a "call to arms" for the outsourcing industry to help distressed firms weather the economic maelstrom and become stronger due to their service-based relationships.
