Commentary
6/28/2012
10:16 AM
Paul McDougall
Paul McDougall
Commentary

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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