When one U.S. company lays off 16,000 Americans to adjust to economic conditions, the story fades over in a week’s time. So why is it that, when another U.S. company elects to outsource some of its IT functions to a well-qualified contractor, disrupting a few hundred jobs in the process, the resulting media and political criticism continues for more than a year?
One catalyst for this reaction is the mistaken notion that American workers are losing jobs to less than fully qualified foreign workers on temporary visas – and are required to “train” these workers before departing. Such accusations are made against information technology services companies based in India – leading to Congressional hearings, unwarranted increases in visa fees, legislative proposals that would deny thousands of American businesses their choice of IT services providers, and potential harm to U.S.-India relations.
{mosads}In reality, the IT professionals coming to the U.S. from India on temporary H-1B visas are well educated and highly trained in technical knowledge. They also are specialists in studying, assessing and analyzing a new customer’s requirements – acquiring the enterprise knowledge unique to a new customer. Documenting and analyzing the customer’s existing IT infrastructure and processes permits the in-coming firm to determine how to improve, automate, and innovate the customer’s IT systems and processes. The end result makes the customer company more nimble, more responsive to its customers, better poised to grow its market share, and hence more likely to create other jobs for Americans.
In free-market economies worldwide, companies sometimes make business decisions resulting in job changes or reductions to remain competitive and adapt to economic conditions. The U.S. Bureau of Labor Statistics reported more than 1.3 million individual American jobs losses due to major layoff events in 2012. The top three causes, accounting for 74.8 per cent of layoffs, were cited as reductions in business demand, completion of seasonal work, and financial issues including bankruptcy. In fourth place at 3.8 percent was “organizational changes” including business ownership change, reorganization, or restructuring. So, by comparison, the number of jobs lost through outsourcing some IT functions is very small.
Of course, any job loss can be very tough for those impacted. Fortunately there is an abundance of job openings for American IT professionals and a growing shortage of qualified people to fill those jobs. According to the latest information from the U.S. Department of Labor, the unemployment rate for computer systems analysts, database administrators, and other IT professionals dropped to as low as 1.5 per cent, compared to an overall U.S., unemployment of 4.9 per cent (the lowest rate since February 2008).
It is both unfair and unwise to focus the blame on India-centric IT services companies: Unfair because the turnover process is the same whether the in-coming IT services firm is American, European, Asian, or India-based. It’s also the same when one IT services firm is replacing an incumbent IT services firm at a U.S. customer site.
It’s also unwise because targeting India-centric IT firms with punitive measures (like the supplemented visa fees included in the December 2015 omnibus bill passed by Congress) throws nails in the path of a U.S.-India relationship that is rapidly growing in both commercial and strategic purposes. Bilateral trade rose from $66 billion in 2008 to $103 billion in 2014. Ten of the top 15 technology companies in India are American-owned. And in the U.S., India-based IT services companies have helped to meet the growing needs of American businesses for high-skilled IT support in order to innovate, open new markets, and expand operations – creating thousands of jobs for Americans as a result.
India’s IT sector also invests nearly $1 billion annually in the U.S., supports the employment of more than 411,000 Americans; pays $6 billion in federal, state and local taxes a year; and contribute millions of dollars annually to STEM education for Americans while supporting many other charitable initiatives.
Let’s get real. More strategic collaboration, trade, and the free exchange of intellectual talent between the U.S. and India are in the interests of both of our nations. Unfairly focusing blame on one country’s IT sector is not.
Chandrashekhar is president of NASSCOM, an association serving India’s IT community.