Recently my kids were reading a chapter in their Std IV English text book - "My First Encounter with Swadeshi" by Indira Gandhi. I remembered this lesson from childhood as well, where Indira Gandhi, then a kid, gave away her favorite imported doll under the influence of Swadeshi movement. The recent developments in the US made me to think that the Swadeshi movement has come a full circle, after more than 100 yrs.
Obama's love for Outsourcing
President Obama's always had the "anti-outsourcing" agenda high on his election manifesto. No wonder the US Govt is taking steps to curb outsourcing to Indian companies, to the extend possible. Recent few developments in particular are indicative of the overall mood against outsourcing to Indian companies.
Firstly, US hiked Work Permit (H1-B) Visa fees from $320 to $2,320 - a huge 625% increase. Although the stated reason was to fund the millions of dollars required to beef up the security at Mexico border, the real reason was to discourage US companies from getting knowledge workers from India. $3000 is quite a significant amount and is likely to hit the profitability of an "on site" resource from Infosys, TCS and Wipros of the world.
Second - more severe - was that the Ohio state disallowed any government IT and back office projects to be outsourced outside to countries like India. The country which is still in the process of recovering from one of the biggest economic downturns of the recent past, is struggling with issues like unemployment. This is an effort to to address unemployment issues. Many see the upcoming elections as a major motivating factor.
Whatever the reasons be, such protectionist steps are counter-productive to the very economic recovery process of the US and against the spirit of open global trade. The only option for the US govt to address unemployment is to create new employment opportunities by letting the US companies (and Govt) be more competitive. More than 50% of the Fortune 500 (read top 500) companies in the US outsource their IT projects and back office to India. Steps like these will only make them lesser competitive. The ban has been widely criticised and seen as very narrow & short-term focused.
Life coming Full Cirlce
Relating it back to the "My first encounter with Swadeshi", I feel this is life coming full circle. Swadeshi movement was started in 1905 by Gandhiji. It was an economic strategy to improve economic conditions in India through self-sufficiency by boycotting foreign products and the revival of domestic-made products and production techniques. The second wave of Swadeshi was driven by the "Sangh Parivaar", 50 yrs after Independence when the Indian economy opened up and allowed foreign companies to setup their shops here. The second one was to protect the local businesses from the biggies from US. Almost 15 yrs down the line, India has moved on. The economy has seen steady growth. We have survived the largest global downturn of 2008-2009 and have emerged stronger. India also established itself as the global leader of IT and back office outsourcing. Giants like TCS, Infosys, Wipro, Bharti, Tatas, Reliance, Essar, etc have gone global, acquiring large enterprises of the west and established themselves as globally competitive organizations. The term "Indian MNCs" became popular. Gone are the days when the desi companies ran under the threat to go out of business because of MNCs from US comping to India. The things have actually turned upside down. The biggest Capitalist economy on the planet is today forced to take steps to save its companies from the threat from the East. Its Swadeshi coming full circle.
Can he ?
All said and done, outsourcing is a reality and an inevitable need of the US companies in order to remain competitive in an economy increasingly dominated from East (read China, India). Obama administration can not stop outsourcing by private companies. Incidentally I am writing this at a time when my own company is in the process of moving some jobs to Hyderabad.
What is the next thing to come full circle. Is it Indian Rupee against US Dollar? Will that happen?
Obama's love for Outsourcing
President Obama's always had the "anti-outsourcing" agenda high on his election manifesto. No wonder the US Govt is taking steps to curb outsourcing to Indian companies, to the extend possible. Recent few developments in particular are indicative of the overall mood against outsourcing to Indian companies.
Firstly, US hiked Work Permit (H1-B) Visa fees from $320 to $2,320 - a huge 625% increase. Although the stated reason was to fund the millions of dollars required to beef up the security at Mexico border, the real reason was to discourage US companies from getting knowledge workers from India. $3000 is quite a significant amount and is likely to hit the profitability of an "on site" resource from Infosys, TCS and Wipros of the world.
Second - more severe - was that the Ohio state disallowed any government IT and back office projects to be outsourced outside to countries like India. The country which is still in the process of recovering from one of the biggest economic downturns of the recent past, is struggling with issues like unemployment. This is an effort to to address unemployment issues. Many see the upcoming elections as a major motivating factor.
Whatever the reasons be, such protectionist steps are counter-productive to the very economic recovery process of the US and against the spirit of open global trade. The only option for the US govt to address unemployment is to create new employment opportunities by letting the US companies (and Govt) be more competitive. More than 50% of the Fortune 500 (read top 500) companies in the US outsource their IT projects and back office to India. Steps like these will only make them lesser competitive. The ban has been widely criticised and seen as very narrow & short-term focused.
Life coming Full Cirlce
Relating it back to the "My first encounter with Swadeshi", I feel this is life coming full circle. Swadeshi movement was started in 1905 by Gandhiji. It was an economic strategy to improve economic conditions in India through self-sufficiency by boycotting foreign products and the revival of domestic-made products and production techniques. The second wave of Swadeshi was driven by the "Sangh Parivaar", 50 yrs after Independence when the Indian economy opened up and allowed foreign companies to setup their shops here. The second one was to protect the local businesses from the biggies from US. Almost 15 yrs down the line, India has moved on. The economy has seen steady growth. We have survived the largest global downturn of 2008-2009 and have emerged stronger. India also established itself as the global leader of IT and back office outsourcing. Giants like TCS, Infosys, Wipro, Bharti, Tatas, Reliance, Essar, etc have gone global, acquiring large enterprises of the west and established themselves as globally competitive organizations. The term "Indian MNCs" became popular. Gone are the days when the desi companies ran under the threat to go out of business because of MNCs from US comping to India. The things have actually turned upside down. The biggest Capitalist economy on the planet is today forced to take steps to save its companies from the threat from the East. Its Swadeshi coming full circle.
Can he ?
All said and done, outsourcing is a reality and an inevitable need of the US companies in order to remain competitive in an economy increasingly dominated from East (read China, India). Obama administration can not stop outsourcing by private companies. Incidentally I am writing this at a time when my own company is in the process of moving some jobs to Hyderabad.
What is the next thing to come full circle. Is it Indian Rupee against US Dollar? Will that happen?
