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Thursday, March 5, 2009

why obama cant stop outsourcing

Why Obama can't stop outsourcing (from a friend)

The Indian information technology industry has reacted with a mix of hope and caution after President Barack Obama said last week that he will not allow US companies that send jobs away to enjoy his tax breaks.

Obama is presumably talking about industry-specific tax breaks, though the details are not clear yet. But it is clear to me that he cannot go very far.

For instance, the US plan can affect General Motors, which is getting government help. I know from experience that GM is doing advanced design for its next generation of automobiles using aviation-standard materials in Bangalore. Does Obama's budget mean that GM will stop using India as a base for innovation? How will GM keep a global edge?

Now, take Accenture, which many think is a US company. It is actually incorporated in Bermuda. Will a US-based retail company (like J.C. Penney, for instance), handing over IT work to Accenture suffer from Obama's moves? If it does, and rival IBM gets a deal that Accenture might have had, remember that IBM has tens of thousands of employees in India, doing work for US clients. The simple point is that US has itself led efforts in making the world economy in an inter-connected web. The nitty-gritty of crunching IT spending is going to be painful.

US firms have already lost the game of efficiency in automobiles to the Japanese and in overall manufacturing to the Chinese. In pharmaceuticals and services, Indian firms can shake the US in everything but blockbuster product development. If you take new products, IT and distributed global research and development are at the heart of whatever remains of Ameri-can capital efficiency, innovation and competitiveness.

In other words, US firms are no longer US firms, but effectively global firms. By doing harm to what Americans call outsourcing, Obama may be axing a branch he is sitting on. Which is why I see his speech as little more than symbolic post-election posturing. If the benefits of tax breaks are outweighed by the gains of outsourcing, US firms will do what makes more sense to them.
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THOUGHTS AL(L)O(W)U(E)D: (my view)
A GOOD THINKING, HOWEVER AMERICAN CULTURE IS TOTALLY DIFFERENT AS FOR AS THE GROWTH IS CONCERNED. THIS KIND OF MISERY IS NOT NEW TO THEM. “N” TIMES THEY FELL AND “N+1 TIMES THEY HAD ARISEN. FORD WENT DOWN, BUT JAPAN COULD SURVIVE ONLY BECAUSE OF THE HIGHER VEHICLES OWNERSHIP IN USA. JAPAN MANUFACTURES TO THE LAWS OF THIS COUNTRY AT LESSER COST THAN SOLD IN THE OTHER PART OF THE WORLD. MY CAR HUNDAI IS SOLD AT A LESSER PRICE THAN THE PRICE I PAID HERE AND ITS SOLD IN USA WITH ALL FACILITIES,AS REQUIRED IN THEIR LAW WHEREAS I PAID MORE FOR LESSER ONE OF WHICH NEITHER THE COUNTRY NOR THE PUBLIC STAKE A CLAIM.
USA MAKE CAR OR BUY THEIR STYLE OF CAR; IT THROWS OUT THE OUT SOURCING, YET MAY HARP ON SOMETHING ELSE TO ACJEVE FOR THEM; AS ON DATE THEY DICTATE AND WE DO, MEAN EVERY ONE IN THE WORLD; THEY FIGHT AND GO DOWN YET RISE UP, MAY BE THIS IS THE NTH TIME; OUT OF JEWS IT GAINES ALL BUT ISRAEL IS NOT AS POWERFUL AND SELF CONTENTED AS USA. I BLESS YOUR WISHFUL THINKING
K RAJARAM IRS (Retd)

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