IMPACT TO THE GOVERNMENT IN INDIA DUE TO US OUTSOURCING
There are a number of reasons as to why India remains the preferred outsourcing destination especially by American companies. One of these reasons is the availability of a well established human resource network as well as quality technical manpower. Another reason is cost effectiveness as the labor market is ready to offer its services at much more competitive wages as compared to the American labor market. Language is yet another advantage that India enjoys over its competitors such as China. English as a language is given a lot of emphasis throughout the education system in India and this ensures that the human resource available has vast knowledge in English and therefore can freely communicate with the American companies.
There is also the factor of time difference between India and America which makes it a desirable destination for outsourcing. There is almost a 12 hour difference between the two countries which means that as America is experiencing its normal working day, India is experiencing its night time and vice versa. This enables American companies that are outsourcing services from India to provide services on a 24 hour basis as when America retires India takes over and vice versa. Finally, Indias infrastructure especially in the information technology sector is of high quality and advances constantly. American companies therefore tap into these resources and achieve great benefits in return.
Regarding the status of India as a high or low tech nation, there is need to first understand the characteristics associated with high tech nations then examine how they relate with India. These characteristics include rapid advancement in technological knowhow, provision of high quality education, availability of highly skilled manpower, high investment in research and development and a readily available market for its products and services (Singhal Rogers, 1990).
Cross examining India as a nation against these characteristics, India has witnessed rapid expansion in its technological abilities especially in information technology over a period of time. It is also home to a considerable number of high quality universities which guarantee high quality education and consequently, highly skilled technical manpower. Research and development is taken very seriously by the Indian government and is therefore financially aided by the government and finally, being densely populated, India has a huge domestic and international market as a result of outsourcing. Singhal and Rogers (1990) argue that India occupies a close third in rank after United States and United Socialist Soviet Republic respectively with respect to scientific and technical labor ability with over 3 million scientists and engineers. In line with this argument, I can safely conclude that India is a high tech nation.
Outsourcing can simply be explained as the engagement of external service providers for certain functions in an organization. Such functions can range from telephone management through the use of call centers to other services such as software programming and data entry to name but a few. American outsourcing to India dates back to the 80s and 90s all with a common view of cost reduction through exploitation of cheap and skilled labor. This has had a technological influence on the Indian government over time (Duggal Simkonis, 2007).
To begin with, the Indian government has embraced an information technology initiative and has realized the benefits that accrue from it. It has also realized the importance of research and development which is now a government funded and sometimes conducted initiative. The Indian government has also implemented a number of policies that seek to encourage outsourcing. These policies include removal of barriers that made it difficult to invest in India for example tedious licensing procedures as well as the introduction of the Information Technology bill in the year 2000 which strives to streamline the IT industry.
In its government systems, the Indian government has embraced information technology in most of its sub-sectors including defense, economic planning and revenue collection. This is also the case for provision of services to the public as the government oversaw a digitization campaign which resulted in the streamlining of vital services such as management of land records as well as the issue of government documents such as passports (Rahul, 2006).
American outsourcing to India has impacted India both positively and negatively. On a positive note, India has benefited greatly from technological spillover effect from America. This is to mean that India has achieved some level of technological advancement from technological knowhow imported from America. Another benefit is creation of job opportunities for the Indian population. Being densely populated, it is a challenge for India to create employment opportunities for most of its citizens and outsourcing therefore plays a vital role in this regard. Creation of wealth is also a benefit associated with American outsourcing. India earns foreign direct investment through the money directly or indirectly invested into the country.
Apart from these benefits, there are some social benefits attached to American outsourcing in India. One of these is the improvement in the living conditions of the Indian population as a result of the increase in wealth. The population also benefits from the technological advancements associated with American outsourcing for example through access to low cost computers and improved telecommunication services. Finally, there is the realization of the nations goal of upgrading its status to join the few information societies.
On the other hand, American outsourcing also presents some challenges to India. Firstly, there is the problem of socioeconomic disparity which sees the gap between the poor and the rich become wider and wider. The rich continue to amass vast amounts of wealth as they have the resources to tap into the business while the poor continue to languish in poverty. Secondly, there is a risk of cultural conflict because as the Americans and Indians continue to interact, so does their cultures. However, there are some American cultural values that do not auger well with the Indians for example divorce and attachment to material possessions.
On a more economic perspective, India has been compelled by America to embrace some aspects of trade liberalization like offering them tax holidays and opening up their market to America as a condition for outsourcing. America achieves this through threats of pulling out and offering the outsourcing business to other competitors which leaves the Indian government no choice than to comply (Rishi Saxena, n.d). Finally, it is unfortunate that through outsourcing, India does not get a chance to enjoy the end product of the services rendered by its citizens. A similar aspect to that of brain drain occurs in this case the only difference being that the individual is still within the confines of India but hisher brain is exploited elsewhere. The Indian government bears the burden of providing quality education but unfortunately does not fully benefit from such resources.
There are a number of moral and ethical issues that have arisen from outsourcing of American companies to India. To begin with, there is the issue of exploitation of natural resources in India which in return does not bring as much benefits as it does to the American companies. This eventually depletes Indias resources which are irreplaceable. Another issue is that of security of data as in the recent past there has been cases of call center scams that originate from India making American companies more apprehensive about using their services. There also have been fraud irregularities especially with the outsourcing of the tax returns process where vital financial information is exchanged. Another ethical issue concerns the cost benefit analysis of outsourcing to India with regard to the fact that manpower is heavily invested in provision of these services but it is at the service of American companies. Finally, there is the issue of cultural differences that exist between America and India with respect to lifestyle, cultural and religious values. There has been slow infiltration of the American cultural values into India as witnessed by the number of fast food vendors that are cropping up in India.
On a final note, it is my opinion that regardless of the negative impact that American outsourcing presents to India, it is a worthwhile venture as the positives outweigh the negatives. American outsourcing to India should therefore be encouraged by the government.
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