Outsourcing debate never ceases in US presidential elections

Outsourcing has always been a hot topic in US and this has now become a hot topic in every presidential debate in US for the last few years. It is widely believed that one of the main contributors of rise in unemployment rates in US has been outsourcing.

USA and Europe are said to be the main outsourcers of jobs and the jobs are being outsourced to developing nations like India, Philippines, Malaysia and China. 60% of the revenues that Indian IT software and service companies get are from US. The jobs are primarily been outsourced by companies to cut down their cost of operation. When the whole world is facing a global meltdown, the US economy has also started feeling the heat. The American economy witnessed a decline in economic growth since the second half of 2009 and the growth in 2010 is reported to be close to 4%. The GDP of the world’s largest economy has just grown at an annual rate of 2.2 % in the first quarter whereas it had grown at 3% in the last year.

Republicans Presidential Debate 2012 - Image courtesy CNN Blogs

The US economy has been witnessing a sharp fall in consumer spending and business investment and it has been widely alleged that the unemployment rate in US is hovering above 8%. Many US corporations are adding more jobs overseas rather than in the home country according to a recent report by The Wall Street Journal. The companies which are adding workforce outside US include Wal-Mart, Honeywell International Inc., International Paper Company etc. Between 2009 and 2011 these companies are said to have added 1, 13,000 jobs in US whereas they added 3, 30,000 jobs overseas. The report also found that largest multinational corporations of America have cut their overall workforce by 2.9 million but at the same time they have outsourced more than 2.4 million jobs outside US.

With presidential elections round the corner, outsourcing has become a very hot topic of debate between the presidential nominees Mr. Barack Obama, the present President of US and Republican presidential nominee Mitt Romney. Both the presidential nominees have been scoring points recently with their stand on issues of gender equality mainly same sex marriage and outsourcing. Mr. Barack Obama has recently accused Mr. Romney of outsourcing jobs to Mexico and China when he was heading the investment firm Bain Capital and outsourcing jobs to India when he was the Governor of Massachusetts. It is said that Mr. Obama is spending close to USD 7, 80,000 to carry out this campaign. This is response to the ad by Republicans which suggested that stimulus package of USD 814 billion given by Obama administration has gone to green energy companies located overseas.

The allegations and counter allegations by the presidential nominees on outsourcing are going to get murkier in the future as US tries to grapple with issues concerning slowdown in the economy. The US administration is taking steps to bring back the outsourced jobs by proposing a tax credit but what is interesting to note is that IT and ITES companies in countries like India are keeping the US companies competitive and these companies use a lot of hardware and software from US IT giants thereby significantly contributing to creation and retention of jobs in US.




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