BPO, A Small Step On A Long Journey?

: When Joseph Stiglitz used the expression Globalisation and its Discontents as the title of his book, little would he have realised the backlash that globalisation would generate in his own country. Minnesota Senate has passed a Bill (44 ayes, 19 noes) to bar outsourcing of jobs under state contracts. It stipulates that the jobs should be executed by American citizens or individuals authorised to work in the US. Isn’t this the worst form of protection? If you can buy a European or American car in Japan why can’t you hire a techie in Bangalore?

Of all the people, Americans would know that protectionism is not the solution to their job losses. About 2.2 million jobs lost in US since President George Bush took the office has little to do with outsourcing. Job displacement is the direct result of innovation and productivity, an essential feature of the new economy. Joblessness in the US essentially is due to lack of commitment to good corporate governance practices and social responsibility by US corporations, as stated by Madhav Mehra, president, World Council for Corporate Governance, which is holding an international conference on this issue in London next May. One of the primary responsibilities of corporations is to continuously strategise for new technologies, products and services, and train and retrain staff to meet future challenges.

All through the 1990s, corporations were using megalomaniac mergers which resulted in jacking up salaries of their CEOs and downsizing employees in the name of productivity. Many of these mergers eventually destroyed shareholder value. During this period, while salaries of the average US worker increased by 3 per cent, the remuneration of CEOs went up by 600 per cent. The differential which 20 years ago was 1:20 has now risen to 1:400.

The purpose of outsourcing is to free up company resources used on repetitive and non-core work and put them to more productive use. This should create additional wealth and more jobs. As people like TJ Rogers, head of Cyprus Semiconductors, have stated, they have been able to keep their home fires burning and continue employment of indigenous workforce primarily because of outsourcing. It is significant that the unemployment rate in Silicon Valley is much less than the national average.

Unfortunately, the trouble with most American corporations is that they work on short-term goals. No wonder that a third of Fortune 500 companies aren’t even there seven years later. They make little...