Low cost efficiency has put the outsourcing companies in India at the centre of worldwide business, resulting in the creation of a billion dollar industry that has been skating over criticism that it is stealing white collar jobs from richer nations for many years. Now it would appear that the industry’s fears about a backlash are coming true in its vital market in the United States.
Provisions in a proposed overhaul of immigration laws in the US would see the closing of loopholes that allow American and Indian outsourcing companies to pay guest workers in the United States wages that are often below the rates set for equivalently skilled US citizens, in line with President Barack Obama’s intention to make it harder for companies in the United States to replace American workers with cheaper overseas labor.
The cost to the companies in India could end up amounting to several hundred million dollars in terms of lost profits. The $108 billion outsourcing industry in India has frequently shrugged off bad publicity in the United States and many other nations since it began to blossom about ten years ago and has had support from many worldwide corporations. However, with US unemployment at a low and the world economy stagnating, the day of reckoning may have finally arrived.
Accusations of discrimination are making little impact in the US. “This has to do with a business model that exploits US immigration loopholes for competitive advantage,” says Rochester Institute of Technology’s Associate Professor of Public Policy, Ron Hira.