How Outsourcing Creates Jobs in the US
Posted by: Katharina Buchholz in News on Jun 15, 2011
Thanks to this Washington Post article, we have finally heard some good news about the American labour market. Mumbai-based business process outsourcing provider Aegis is hiring – in New York. While outsourcing jobs are experiencing salary hikes in India, the U.S. market currently set free a lot of talent, causing the former outsourcer to outsource its outsourcing.
This new development is ultimate proof that Indian industries have benefited from outsourcing operations and that the big Indian outsourcers have grown into partners and independent global players to be reckoned with. Employing Americans helps the expanding companies to tap into sensible markets like life and health insurance or financial products.
Aegis is ringing in a new era in which outsourcing is not only about outsourcing, but about the right mix with nearsourcing and cross-sourcing. Currently, Aegis is employing 5,000 people in the US, about 90% of them American citizens. Tata Consulting is also planning to hire up to 1,000 Americans this year.
Still, outsourcers receive bad press. This article from HuffPost discredits a different way of job creation through outsourcing: it benefits companies causing them to grow and therefore hire more workers.
The nice and simple artithmetic goes as follows: companies hire in India, become more competitive, subsequently expand their operations (both in India and the US) and take over the market shares of the companies deciding not to outsource. Therefore, instead of 100% of the jobs being located in the US in the beginning, now only 66% are. Good maths so far.
Only that the calculation assumes that the 200,000 “U.S. jobs” in the “20 U.S. companies” could, as an alternative, remain in their current state forever. And they lived happily ever after. Six words: Not the Reality of the Market.
Companies have to grow. Markets have to grow. The fact that companies like Aegis and their American partners still do is reassuring in times of doubt in the system of the free market. The opposite scenario is the one that is nothing short of scary.
