Outsourcing Hits India

Walter Russell Mead
October 17, 2011

Indian call centers have long been the most visible symbols of the outsourcing of American jobs — even inspiring the premise of a primetime NBC comedy. Now many of these call centers are being confronted with a familiar problem: outsourcing. The Washington Post reports that Indian call-center companies are increasingly moving their business abroad:

But as more U.S. companies shift to cheaper destinations in Asia, many Indian call-center companies are also setting up operations abroad. These companies are finding not only lower costs and plenty of English speakers, but also better infrastructure and government incentives.

“India absolutely cannot take the voice-based call-center business for granted anymore,” said Sujit Bakshi, president of the corporate affairs and business services group at Tech Mahindra, an information technology services and outsourcing company with operations in the Philippines and Malaysia. [...]

In India, about 20 percent of labor costs incurred by outsourcing operations goes to transporting employees home at night because cities are unsafe, Bakshi said. In addition, many offices in India do not have an uninterrupted power supply and must use expensive diesel generators.

Absolutely nobody is safe anymore; in China yesterday I went to buy some gym shorts and found from the label that they were made in Thailand.

Americans can learn something from India, though. Jobs that would have otherwise stayed in the country left because of the costs imposed by bad infrastructure. In the US, our physical infrastructure could use some work, but the real problem is that our social infrastructure is in such bad shape. Our schools and our health care system cost too much and don’t deliver enough. Tangled and poorly administered urban regulations turn our cities into job killing machines; our legal system imposes huge costs on business large and small, and the bureaucracy, paperwork and payroll taxes associated with employment create unnecessary expenses and hassles.

We don’t have to stand here helplessly and watch jobs disappear. We don’t have to cower behind protective tariffs that will wreck our economy and poison world politics. And we don’t have to compete on low wages. But in a world in which even India is losing jobs to cheaper competition, we can’t go on as we are and expect good results.