Shipping Jobs to India: Democratic Foe and Republican Ally?

by Samatha Breslow October 27 2010, 21:19

Democrats are notorious for criticizing Republicans’ support of worldwide American companies who “outsource” (i.e., move operations and workers) to nations like India. While Democrats’ opposition to outsourcing was initially meant to incite sympathy and support from voters on “Main Street”, it has begun to alienate wealthy and influential Indian-American voters, most of whom were previously supporters of Democratic candidates.

Shipping jobs to India has long been a rival issue between Democrats and Republicans. However, Elizabeth Williamson’s Wall Street Journal article entitled “Outsource Attack Ads Alienate Voters Tied to India” provides a new spin to the decade old party battle. According to the article, USINPAC, the chief Indian-American lobbying group who have long funded the Democratic Party, is now contributing money to Republicans to defeat Democratic candidates who criticize so-called outsourcing.

 One example of Indian-Americans’ new push for the Republican Party is John Kasich, the GOP challenger to Ohio Democratic Governor Ted Strickland. After Strickland banned outsourcing of Ohio state business last month, the USINPAC emptied their pockets to Kasich. Additionally, in Illinois, 200 immigrant Indian business owners have raised over $100,000 for Republican candidates. 

Why are Indian-Americans so ideologically supportive of outsourcing? For the same reasons Republicans support American companies that sometimes bring baseline jobs to India: it allows those U.S. companies to be more competitive by increasing their local country employment. While this concept has fathomed Democrats for decades, here is a simple explanation. According to a World Bank survey provided by HSBC Business, it would cost $19,000 to employ an American as a call agent, and $7,500 to employ an Indian. By allowing unskilled, baseline jobs to be served in India for less than half of the amount it would cost to employ an American worker, it allows technology-based companies like Dell to spend those saved funds on growth and expansion. And, finally, economic growth of American companies in those foreign locales often results in the creation of more skilled jobs for U.S. workers who service or oversee those foreign operations. While this may be an oversimplified explanation, it is still a logical conclusion of why Indian-Americans support outsourcing. It also suggests that Democrats should quit their witch hunt for corporations who endeavor to expand their operations and employment overseas, even though they are engaging in what the Democrats otherwise perceive as negative outsourcing.  

In this regard, Democratic House Representative Jerry McNerney introduced legislation entitled: “Stop Outsourcing and Create American Jobs Act of 2010” (H.R. 5622) earlier this year. Under Section 4(a) of that Bill, a “Federal department or agency may give a preference in the award of a contract for the procurement of goods or services in a fiscal year to any potential contractor that has not engaged in outsourcing during the fiscal year . . .” How would Democrats expect this proposed legislation not to alienate prominent Indian-Americans? This bill broadly, and suspiciously, procures funds to any contractor, regardless of merit, who does not outsource. According to an interview in McKinsey Quarterly with Romi Malhotra, who runs Dell’s India operations, Dell engages in so-called “outsourcing” because it enables them to limit their labor costs while, at the same time, benefit from the knowledge and experience that local workers acquire while working with other companies, both local and foreign. Thus, Dell outsources not just for lower labor costs but also to learn from Indian-based companies. If this Act were implemented, American companies (and therefore the U.S. global economy) would be deprived of knowledge from competitors around the world. As a result, the “Stop Outsourcing and Create American Jobs Act of 2010” legislation would not only alienate Indian-Americans who want the Indian economy to thrive, but will also stunt U.S. corporations’ ability to grow, learn, and progress from outsourcing to countries around the world, such as India.   

This should be an awakening for Democratic politicians who feel required to demagogue companies who outsource. Not only are they weakening the U.S. economy that they are fighting so ardently to lead, they are, ironically, funneling reelection funds into the coffers of their competitors.

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