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6/28/2012
10:16 AM
Paul McDougall
Paul McDougall
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Obama's Attack On Outsourcing Rings Hypocritical

Campaign jabs at Mitt Romney notwithstanding, the evidence suggests the President wants to use outsourcing to boost ties with India and level the global playing field.

President Obama this week slammed Mitt Romney for outsourcing jobs overseas. That took some jam, given that the administration for the past three years has actively promoted offshoring while making nice with India over the issue.

Obama hit Romney for investing in companies that shipped work to low-cost locations like India and China while the former Massachusetts governor was at Bain Capital. The President said that's proof that Romney is not the big job creator he claims to be.

"Governor Romney's commitment to outsourcing is not just part of his record, it's part of his overall economic vision that he and Republicans in Congress want to implement," Obama said Monday during a stop in New Hampshire.

Obama's campaign press secretary took it a step further. In a memo to reporters Wednesday, he said Bain provided "a guidebook for other companies on how to ship American jobs overseas."

The tone of these attacks suggests Bain was funneling American workers into a wood chipper, rather than engaging in a business practice that has become standard operating procedure for virtually every Fortune 500 company over the past 20 years, starting with Jack Welch's General Electric.

[ What impacts workers more: outsourcing or automation? See Outsourcing or Automation: No Difference To Unemployed Workers. ]

Offshoring does cost American jobs in some cases, but it also gives American companies access to a global pool of talent and global markets. But even if one does not accept the business case for outsourcing, it's hard to escape the fact that Obama's anti-outsourcing rhetoric is hypocritical.

As I've previously reported, the United States Agency for International Development, under Obama's handpicked appointee Rajiv Shah, has championed outsourcing around the world and has used millions of U.S. taxpayer dollars to train workers in developing countries for jobs at companies that specialize in offshoring IT, manufacturing, and call center work from the United States.

USAID launched such programs in a number of countries, including Sri Lanka, Armenia, and the Philippines, and only discontinued them after InformationWeek reported on the practice.

Obama's support for outsourcing doesn't end there. While the President talks tough when he's, say, stumping before Michigan factory workers, he and his representatives strike a different tone abroad, especially in India. "The United States not only welcomes India as a rising global power, we fervently support it, and we have worked to help make it a reality," Obama said during a speech to the Indian parliament in late 2010.

Obama cabinet members have been more direct in floating the notion that outsourcing is vital to good relations between the U.S. and India, which the administration views as a key ally in its efforts to stabilize Afghanistan before the troops leave.

Here's what Gary Locke, U.S. ambassador to China, had to say in New Delhi last year when he was Obama's Commerce secretary: "Ours is increasingly a partnership of equals, with major U.S. multinationals like Cisco, GE, and IBM locating major research and development facilities here, and depending on Indian scientists and engineers to do growing amounts of higher-value-added work."

Sounding like a spokesman for NASSCOM, the lobby group for India's outsourcing industry, Locke added that, "We came to India for the costs, we stayed for the quality, and we're now investing for innovation."

Last November, State Department deputy assistant secretary Geoffrey Pyatt was in the Indian coastal city of Chennai, one of the country's biggest outsourcing hubs, talking about how the U.S. and India mutually benefit from offshoring. Pyatt said the notion that outsourcing is a one-way street that only benefits Asia is "outdated."

"Bilateral trade is flourishing, with Indian investment in the United States increasing substantially. The pace of innovation in India has been amazing. Here in Chennai, automobile components, software development, hardware manufacturing, and healthcare industries are all thriving, building out a diversified economic base reflecting the Indian economy of tomorrow, directly linked to global markets, and vital to U.S. and global economic prosperity," Pyatt said.

"On the U.S. side, the outdated perception of an Indian economy that detracts from U.S. production and output is widely seen as an anachronism. As former United States Trade Representative Susan Esserman recently noted, the periodic debate over outsourcing doesn't 'begin to capture the richness, breadth, and diversity of the U.S.-India economic relationship,'" Pyatt continued.

Meanwhile, numerous bills that would restrict outsourcing have gone nowhere during the three-and-a-half years Obama has been in the White House, and he's spent zero political capital trying to change that.

Getting the picture? Obama the campaigner is big on anti-outsourcing rhetoric when he's on the hustle. Obama the globetrotting, internationalist president believes outsourcing is crucial to leveling the playing field between the West and developing nations, and thus vital to world peace, stability, and economic growth.

Romney? He just thinks outsourcing is a good option for cash-strapped companies facing bankruptcy. Where's the fun in that?

InformationWeek is conducting a survey on the state of IT outsourcing. Take our InformationWeek 2012 State Of IT Outsourcing Survey now. Survey ends July 6.

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catfsh
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catfsh,
User Rank: Apprentice
8/26/2012 | 4:22:58 PM
re: Obama's Attack On Outsourcing Rings Hypocritical
All I know is this, what IG«÷m seeing with my own eyes. I happen to live in Silicon Valley, and whatG«÷s happening today isnG«÷t just about outsourcing, while Visa abuse plays just as much apart along with age discrimination right here in America. IG«÷ve driven past Apple, and Cisco, and many, many other companies out here, and mostly what IG«÷m seeing is an endless stream of workers coming and going, workers mainly from the country of India.

People in this country are living with the false belief, these workers will be returning back to their countries of origin after a two year stay. Whenever I hear this, I laugh my azz off. Well, Wake up peopleG«™G«•ThatG«÷s not what happeningG«•. These Visa workers are staying, and staying in droves; not just this H1b or L1 Visa worker, but in many cases his/her entire family is being brought over here to join them.

Companies employing them, they are actually involved in sponsoring their foreign workers in obtaining green cards so they can stay put right here in this country. This is what is going on, and it happening at an astronomical level. Bottom line is, it really doesnG«÷t matter should you be tooting your horn for either Obama or Romney, it doesnG«÷t matterG«™WeG«÷re totally screwed either way.
Tom LaSusa
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Tom LaSusa,
User Rank: Apprentice
7/13/2012 | 4:29:03 PM
re: Obama's Attack On Outsourcing Rings Hypocritical
Thanks for pointing that out, Tonilevy. That post has been removed for its inflammatory nature.

Tom LaSusa
Community Manager
Tonilevy
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Tonilevy,
User Rank: Apprentice
7/12/2012 | 8:22:03 PM
re: Obama's Attack On Outsourcing Rings Hypocritical
To comment by CPATEL000: dear lord, who are you and why were you allowed to post?? I have friends that have been making comments about the arrogance and bigotry of Indians, but, jeesh...disgusting sentiments. Just disgusting. Go back to your home and get your nose out of our business.
TVUONG495
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TVUONG495,
User Rank: Apprentice
7/2/2012 | 7:35:17 PM
re: Obama's Attack On Outsourcing Rings Hypocritical
Please leave politics out of this subscription. I have plenty of other news feeds to subscribe to without having to listen to editors political bias one way or another. I just want to look at industry articles without election politics - i have plenty of other sources for that.
BGREENE292
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BGREENE292,
User Rank: Strategist
6/30/2012 | 3:52:42 AM
re: Obama's Attack On Outsourcing Rings Hypocritical
If outsourcing is misnamed, it is widely understood as outsourcing to an offshore location. Outsourcing locally or internationally began is a short-term means of managing production limitations, but short-term fixes are not necessarily long-term solutions, since lines of control and communications are more easily broken. That explains why some of the jobs outsourced offshore have come back to this country-- the strategy did not work nearly as well as expected.
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Despite the myth about lower cost, outsourcing has not proven a universal remedy for greater production efficiency. In the Bush years, the US government at one agency compared unit production costs between a cost-plus outsourcer and in-house production. In-house won handily, in part because it was as efficient as the outsourcer, and in part because it had no layer of profit to add to the end-cost / price.
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Outsourcing also generates complexity and cost of its own, which is the reason every corporation planning to migrate production overseas must look at the total effect.
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Corporations must have predictable and supportive environments to succeed, which is the gift American communities have offered from the beginning. One measure of financial stability and strength is the investment a community makes in the corporation, whereas the media spotlight usually focuses on only what the corporation brings to the community. That community investment expresses itself early in tax incentives and pre-built industrial parks, but continues in well-educated employees who work at good jobs and can support their families, buy homes and send children to college. To the extent this community investment in corporate success is ignored, we have the explanation for why the American middle class is disintegrating before our eyes.
cxf
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cxf,
User Rank: Apprentice
6/30/2012 | 3:17:16 AM
re: Obama's Attack On Outsourcing Rings Hypocritical
Susan Esseman has her facts bass ackwards. The US runs a trade deficit with India and has so every year since 1985; that "breadth and depth" net benefit goes straight to India. Fortunately, India's trade advantage is a paltry 20 Billion approximately, dwarfed by US total IT spend of over 700 Billion approximately.
BGREENE292
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BGREENE292,
User Rank: Strategist
6/30/2012 | 3:17:09 AM
re: Obama's Attack On Outsourcing Rings Hypocritical
"Outsourcing" becomes a political issue when American jobs are lost, but not replaced-- whatever the rationale. If the past four decades of job migration to factories in Asia were balanced by incoming jobs from the same region, the global trade ideal of economist Ricardo would become true-- "Let every country capitalize on what it does best," said Ricardo.
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But the jobs sent overseas by American corporations never came back, even as many corporations now accelerate the rate of job migration / loss.
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As a matter of historic fact, the American opposition to NAFTA, CAFTA and plans for similar treaties points out that American communities of workers and investors nurtured hundreds of small companies as they became global giants, and gave them taxpayer-paid breaks all the way. We should not treated with such ingratitude for the investment we Americans have made to ensure corporate success.

Sam Iam
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Sam Iam,
User Rank: Apprentice
6/30/2012 | 12:43:28 AM
re: Obama's Attack On Outsourcing Rings Hypocritical
If you want to argue that Obama has not used fiscal stimulus to repair the Republican damage fast enough, that is reasonable (even though the Republicans would have and did block it). Obama inherited a free falling economy, losing 500,000 jobs per month thanks to the wonders of deregulation. He stabilized the economy and has had positive job growth since March of 2010.

You can't start a house on fire and then complain that the guy trying to put it out did a poor job... and therefore the arsonist should get another crack, even though he still thinks fires are an economic model that work.
MyW0r1d
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MyW0r1d,
User Rank: Strategist
6/29/2012 | 7:40:46 PM
re: Obama's Attack On Outsourcing Rings Hypocritical
It's an election year, but even if it wasn't who would believe the political rhetoric from either side? Analysis of either party would show contradictions depending on location, venue, audience, even the time of day and climatic conditions impact the delivery. What they say only has value if applied in the context of specific proposals/laws under consideration and expected to be enacted within weeks.
EVVJSK
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EVVJSK,
User Rank: Apprentice
6/29/2012 | 5:42:10 PM
re: Obama's Attack On Outsourcing Rings Hypocritical
A seasonal/temporary job is still a job that keeps someone (for however long) off of unemployment and paying taxes.
The ONLY thing that will create permanent jobs (either Governmental OR Private Sector) is increased demand for goods and/or services. The ONLY thing that will increase demand for goods/services is more people who have enough money to demand goods and services. The primary way to increase demand is for goods/services if for some of the wealth contained by the rich to be put into the hands of the low andmiddle income (who will buy the goods/services they cannot currently afford). Get rid of Bush tax cuts for the wealthy (just back to where they were in 2000, they don't have to change any more than that). Thay money will begin to circulate throught economy immediately and begin to increase demand for goods/serivces.
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