The Future And Other Side Of Outsourcing And Offshoring To India
Objective and Caveat: I’m not vouching for outsourcing. Even I would outcry than anyone else if my bread is getting snatched away by some unknown from a remote place but these are the consequences of globalization and I would soon adapt to live with it, swim along than against the current, and begin my search for better alternatives to benefit myself also from this phenomenon of globalization than fighting against it or grunting my faith. Hence in this post, I’m rather trying to evaluate the occurrence of events and their impacts and consequences into the future on both sides of the coin.
Before we go into the pros and cons of outsourcing and offshoring and having a perspective view from both sides of the coin, US and India, do you know which are those jobs and businesses that are getting outsourced to India? Are only back-office jobs such as call centers and healthcare documentation jobs where you do not need an eye contact or handshake with the customer getting outsourced? Are only low-skilled jobs getting outsourced or do you know of any high-tech jobs getting outsourced? Yes, not only low paid, low skilled or labor intensive jobs are getting outsourced but also high tech, brainy jobs are getting outsourced. In this video, let’s have a look at on what sort of high-tech jobs that are getting outsourced, and why India has become such a booming market and an attractive destination for all the major businesses in the United States or rather worldwide, global corporations?!
Source: YouTube video Jobs Outsourced to India.
Benefits of outsourcing and offshoring medical transcription services:
If you calculate the expenses for a transcriptionist in Oregon, it works around $47,236.60 per year or 22 cents a line considering that a transcriptionist transcribes 4000 lines a week where as if the work is outsourced, it can be done for as low as 8 or 7.5 cents per line. That’s a whopping savings of 59%. By outsourcing non-core functions like medical transcription, coding and billing to low-cost destinations, healthcare organizations and providers will be able to direct their full attention to their core functions like patient care. The hospitals or companies vouching for outsourcing say the money saved likewise could be further invested in businesses and creating further jobs in the US. So what goes around, comes around. So, isn’t it a myth that outsourcing is bad for America? Is outsourcing to be blamed for lack of jobs?
Source: YouTube video Myth: Outsourcing Bad for America
Source: YouTube Video Is Outsourcing to Blame for Lack of Jobs
We have seen the US scene of jobs getting outsourced. Have you seen the other side of the coin, in India? Thomas L. Friedman, Foreign Affairs Columnist, New York Times (but this time for Discovery Channel) explores the other side of outsourcing. Come on let’s have a look at it.
Source: YouTube video ABC News report on Outsourcing to India.
Anything other than “savings” that could support the cause for offshoring? Of course yes! It maintains peace in that part of the world!
How can a common man in the United States be benefited of this outsourcing wave? Well, you can hire a mathematics private tutor or outsource yourself for surgery, I mean, medical outsourcing! Mixing healthcare and tourism could be specially enticing if it saves thousands of dollars.
Medical tourism/health tourism to India:
Bilateral hip replacement surgery in India costs $20,000 compared to 120,000 in Florida, a savings of $100,000 or one-sixth of what it would cost in Florida or an open heart surgery on infants would cost less than $2000. A heart valve replacement surgery in the US costs around $200,000 where as in India around $10,000. 40% of the doctors in the US are Indians. So why not a common man in the US take advantage of the counterparts of those US doctors offering world class service at cheap rates in India combined with a tourism visiting all those great places like Taj Mahal? See the video below.
Source: YouTube video ABC News Report on Outsourcing Part 2
Okay, we heard all those backoffice outsourcing advantages and disadvantages, benefits, ins and outs, everything on offshore outsourcing to India. Now the next question arises. Where will this trend end? Jobs from the United States found their way to India or the Asian countries just because of the cost advantage but if that cost advantage is going to be eaten up by the monster ‘inflation’ and wage rises in India, those jobs are obvious to find another destination elsewhere on the map where it is going to be cheaper than India. With inflation speeding up in India, the jobs have either to be retained at US or diverted to Pakistan or Bangladesh or any other country that provides competitive rates. Globalization and global rates!
Source: YouTube video: Future of outsourcing with the Growth of India and China and emerging markets.
And this video elaborates a bit more in detail about the future trend of outsourcing.
Source: YouTube video Future of Outsourcing and Offshoring.
Conclusion: Well, I think this post has been a total outsourcing guide. Now my opinions.
With a broader perspective, my opinions go with Aziz Premji’s (Chairman, Wipro) words. I quote Aziz Premji here: “So much of the wealth in the west has also come through access to global markets. You cannot have double standards in globalization. Globalization has to be a two-way traffic.”
With the rise in Indian household income levels, there is a new market emerging for US companies and multinationals to sell their products. What goes around comes around!
And on the part of India, a compromise has to be made with all those adversities that a flourishing economy and imitating a western culture would be bringing in as pointed out by the orthodox mentalities, like deteriorating traditional ethics, morality and cultural values, lack of adequate bond between family members and everything money motivated. On the economic front, if India still has to sustain the outsourcing wave and its success stories and retain the existing clientele, it has to contain inflation and rising wages, combat terrorism, maintain a vigil alert against any further attacks on silicone cities, and across the table settlement of disputes between neighboring countries, something for the people at helm of the Indian government to think and act up on. Furthermore, if Indian Rupee appreciates against US Dollar as it did to an extent of 20% in 2008, say for approximately 50%, or to the value where it was in the 1980s or before that, all these buzz of activities will be brought to an abrupt end with all those outsourcing companies fleeing the country at the greatest pace they can!
(For as long as I can remember, the Indian Rupee has steadily depreciated against the US Dollar over time. In the early to mid 1970s, the exchange rate was 7.50 Indian Rupees to one US Dollar, in the mid 1980s it was 13 Indian Rupees to one USD, in the mid 1990s it rose to 33 Indian Rupees to one US Dollar and in 2005 it moved further northwards to 43 Indian Rupees to one USD. Now it has crossed 50 Indian Rupees to one US Dollar.)
Tags: backoffice outsourcing advantages, offshore outsourcing India, outsourcing guide
India has immense underutilized potential of youth that if employed in a proper planned manner, it is definitely to become an economic super power in a decade or two.
Secondly, if the trade gap narrows, that is, if exports from India outweigh imports to India, it is obvious that the Indian Rupee will strengthen against US Dollar, which is quite possible and cannot be ruled out. You made it a point there. What makes outsourcing so attractive is the difference in value between the two currencies and if that gap too gets narrowed down, outsourced jobs have to find another country or to be retained at homeland itself.
We are self sufficient in most of the commodities including food, think of feeding a population of 1,166,079,217 (July 2009 est.)
However, we are depending entirely upon other countries for our energy requirements. We are a major importer of crude and petroleum products. Once you have an alternative for fossil fuels, that’s going to have a major impact on our economy or if we could tap all those crude that we’re finding in our river and sea basins ourselves, we could be self sufficient. Dunno if it’s going to be a distant dream. We definitely don’t want those American jobs and culture in our country.
As said in the second video, I would definitely say that only after the apparels from our country, (Tirupur, India) that reached the US markets in the 1980s (perhaps late 1970s), the US clothing prices started treading southwards. I, myself, export apparels from India and am a witness of the prices. US clothing price index shown here is absolutely right. Isn’t that a damn good savings for every American citizen? Why aren’t they blaming India for shifting of those manufacturing jobs even two-three decades ago while enjoying the fruits of it?
If American companies like Coke, Pepsi, Citibank, General Electric, Reebok, Motorola, McDonald, Oracle, MicroSoft, to name a few, taste success and rake in profits to the US, why not we bring some of their money to our homeland? How can the Americans expect the businesses to be a one-way traffic?
Thought provoking valid points by everyone of you. I’m amused by the discussion going on here.
I think the recent Mangalore pub attacks by Shri Ram Sena activists on women found consuming alcohol dressed in western style and and the protests that India sees year on year against Valentine’s Day celebrations depict our conservatives’ unwillingness to accept the western culture creeping into our society, all the credit of this chaos goes to the American jobs landing in our country. What do you say, either to accept blindly and transform to a country’s culture that’s merely 200 years old or preserve our tradition of thousands and thousands of years old?
Yes, I agree that India for 10 or 20 years will become super economic force which with china will rule the world, at least at east side of world.
Mark
As the economy faces pressure in the United States, more and more jobs and getting assigned to India. This trend will only grow as technology needs increase in the healthcare industry.
Read my caveat. Neither I’m pro outsourcing nor con. Neither I’ve a conservative nor a liberal mind for Indian customs, tradition and rituals. Staying neutral, I’m just evaluating the occurrence of events as it happened over the last two decades and am looking into the future in trying to evaluate where will this offshore outsourcing trend of US jobs to India would lead to in both the countries in the next decade.
Great article Raj! I recommend that everyone with gripes about outsourcing read this article. Not all effects of outsourcing are bad, lots of good that comes with it. I’m an MT, and I do not consider you guys rivals but colleagues. We’re all in this together.
Thank you dude.
After reading our discussion here, one of my friends mailed me an article something in relation to the discussion here, about “Petrodollar scam” or “Petrodollar warfare.” (In fact, I got two mails from two different friends but with the same essence.) Google about it or read Wikipedia’s theory of petrodollar warfare or the petrodollar theories of warfare.
I’m reproducing a presentation on it here. Find time to view it.
While looking at the occurrence of events right from the 1970s till date as said in this presentation, the possibilities described in this presentation cannot be ruled out entirely as a scam especially with the fact that Bush couldn’t prove to the rest of the world after the Iraq war that Saddam Hussein was in possession of chemical weapons or biological warfare. So if the points charted out in this presentation is true and if all or at least some nations migrate to Euro as their trading currency, no wonder we can anticipate another world war, “world war III,” or even if there isn’t going to be world war III, one can still anticipate a sharp fall in the value of US Dollar with the gradual acceptance of Euro as common currency, leave aside the current state of American economy in doldrums.
Obama in his recent interview with the public affirmed that the high paying jobs will be retained in the United States itself. I’m losing hope in him. It should be the other way round. If you take a count on who’s affected, it’s people in the ordinary jobs, ordinary US citizens that are more affected while those in high profile jobs are only a few. So what does he indent to do retaining those high paid jobs? I don’t know who he is going to save. Another nail on our coffin?
I am really stupefied by the above conversations!!!!
Hi Raj,
This is the first time I am visiting your blog and is really amazed at the kind of discussion forumm that you have build up here. Since Promantra is also into Outsourcing and Medical Transcription, this discussion is really palatable for me. Thanks for your initiative
According to the latest report of Reserve Bank of India on foreign exchange reserves dated Jan 16, 2009, for the period ending September 30, 2008, India is sitting on huge forex reserves of US $286,336 million. (It peaked USD 309,723 million on March 31, 2008.)
Personally I feel if the Indian government banks on this reserve for domestic investment purposes, (I mean purchase Rupee for Dollar) the Rupee should appreciate in value.
One more supporter for you Pratap! Another friend of mine, Gops, sent me a mail with the contents of this link: Indian Economy Is In Your Hands.
To Janet – It’s not Obama’s fault that some in the US are losing jobs…. Put the blame on the CEOs of the US companies – CEOs are the ones who exploit everyone!
Thanks for your view from “the other side”. America and Europe are both in a state of either static or declining populations. Eventually there aren’t going to be enough people to fill the jobs needed (although that’s not quite the case in our current economic situation). Globalization is the only solution. There are risks and benefits either way, but why fight the inevitable? I don’t have time today to view all the videos, but I do plan to come back and peruse them in more depth. Thanks for your thoughts!
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