Can we do without outsourcing any more?

We live in a world of open and integrated economies. And therefore it remains a big question whether it is actually possible to place a ban on outsourcing the way US President Barack Obama has been chanting. This month, Barack Obama lashed out at outsourcing once again by claiming that the US government will provide tax benefits only to firms that create jobs within the country. While this seems like a tacit move with the Congressional polls around the corner, the new arrangement could hit the Indian IT industry that is an estimated USD 50 billion dollar industry. The industry is primarily based on work from the United States.

While the President of the US is insistent on moving his country out of the realms of outsourcing, it is something that will not be so easy to get rid of. It might be something that world will no longer be able to do without. As globalization and integrated economies become precious for businesses, with a move such as this it might be difficult to win too many votes.

Earlier this month, Ohio also introduced a ban wherein all government departments of the state cannot engage in offshore outsourcing. This is something that India can content in the Agreement on Government Procurement (GPA) but only as a full-fledged member. This might take some time because India became an observer of the GPA only in November this year. Therefore, it will be difficult for India to contest this ban.

While events like this threaten to break down the Indian outsourcing industry, it seems implausible that a blanket ban on such a global phenomenon can actually work.

Obama is using outsourcing as a gainful agenda to garner votes in the upcoming elections. He hopes that this will reverse the loss of 8 million jobs that the US faced at the time of recession. But is it really possible? For the economy to pick up, it is important to keep the ball rolling. For the economic ball to roll, globalization is a must. Only then can countries progress. In such a case can countries actually do without outsourcing? Doesn’t seem like it. It might sound good but seems like an impossible dream to live.