Outsourcing in Modi and Trump Era
It is a contrast that many can choose to ignore, but can’t. While both Indian prime minister Narendra Modi and the American President Donald Trump are leaders of their countries’ right wing parties, and appeal to a similar demographic, they have very different views regarding outsourcing, a word that often evokes negative connotations in recent times.
While Modi has actively pursued American IT companies, and lobbied at the White House to relax visa regime for Indian tech workers, Donald Trump has been increasingly isolationist, at least outwardly. One could argue, that both of them are trying to live up to the promises that they made during their respective campaigns: Modi promised development, and has been trying to portray a business-friendly, globalist image of India. Trump, on the other hand, had promised to cut down outsourcing, and has been trying to do the same in America. How successful he has been able to stop American companies from outsourcing, is a different story altogether. It is also worth noting, Modi’s development policies are increasingly being questioned in India, and citizens are ever more impatient to see the shining India he has promised.
What does this mean for companies who want to outsource work to India? It just means, the time is ripe to begin offshore outsourcing to India. Let us take a look why this is so.
Why Trump’s visa ban, and Modi’s start-up focus is good for all players
The burning issue in the offshore outsourcing industry has been the question of H-1B visas, which are often sought by some IT companies for their employees to work onshore, in US. Trump wants to make sure that more Americans are hired in America, which is a valid expectation. Outsourcing, in the past, led to many employees from destinations such as the Philippines, India, Eastern Europe and others to seek H1B visas, leading to foreign talent being hired in the US, for a lower cost to the company. The new rules make it difficult to hire foreign talent this way. This is good for American workers, who have the prerogative to seek employment in businesses that operate within US.
Trump’s visa changes are a boon to companies that work on a different outsourcing model: offshore outsourcing. Offshore outsourcing helps companies to hire teams or individual employees working within dedicated hiring companies for a specified amount of time. This means, American businesses can outsource all their needs except their core business activities to offshore teams, and hire only Americans onshore. As businesses are able to scale by offshore-outsourcing their tech, backend, administrative and customer service responsibilities, they will be able to nurture their existing employees, and hire more Americans, instead of having to import foreign workers on H1B visas. This is a win-win situation for both Americans and offshore workers who are talented, and wish to work from their own countries.
Technology makes it possible to have teams across the world, and the physical presence of foreign workers on American soil is not required, thanks to internet and cloud computing. Indian Prime Minister Modi has encouraged the growth of startups, which means, there are more hardworking and talented firms out there, which are ready to take up projects and work as offshore employees or contractors. Imagine offshore outsourcing this way: no need to bring foreign workers on H1B visas anymore. This helps you save a lot of money. Instead, hire offshore workers who work from offices in their home countries, while you have the freedom to hire Americans for your core business roles. Your extended team will not only assist your onshore (and American) team, but also manage and train them, if it comes to that.
A few advantages for American companies with this new model:
- Reduced overheads
- Maintain control over projects
- Maintain security and confidentiality through service level agreements
- High quality work
- Complete ownership of finished products
- Excellent coordination regardless of variations in time zones, thanks to technology
- Enhanced collaboration
- Americans stand a higher chance of being employed in American companies, thanks to changes made to H1B visa.
Isolationism and protectionism are losing out
In trump and Modi’s era, outsourcing has a bad rap because of the anti-immigration, anti-globalist sentiments of a certain section of the American society. The American Right grasped these sentiments to reach the White House, but have fumbled to please corporate lobbies and the Wall Street. The political rhetoric has been to maintain an isolationist stance, but American businesses have increasingly grown frustrated with increasing costs of IT education and hiring, making it all the more inaccessible to the American public.
Yet, the world is changing as we speak, and as you read this opinion piece. Theresa May faced a humiliating defeat, after calling for an election in Britain. Her own isolationist policies encouraged her to call for a Brexit referendum, which resulted in Britain pulling out of the European Union, though that is still being negotiated. In the recent elections, young people voted against her policies, with all their jobs and education in the EU at stake. If not anything, it shows that the famously inward British people too, have begun to look outward, and toward the market forces that drive the global economy.
The common theme if we observe both the US and the UK is that people are vocal against isolationism, and businesses are increasingly disgruntled with policies that seek to stop them from doing business the way they want to do, anywhere in the world. This includes offshoring jobs to affordable vendors who possess the talent, infrastructure and innovation.
Today, the market forces are enabled and driven by technology. IT and the internet have shaped the world we live in today. While political trends across the world reveal a move toward the right, there is also a resurgence of globalist attitudes. It is becoming increasingly clear that we do not live on islands, and all our economies are inter-connected. Technology, and the way internet brings people together, has made outsourcing a part of our lives.
Why Offshore outsourcing to India is a good idea?
- India has not created the 10 million jobs per year that Modi promised. Only 230,000 jobs were created between April and December 2016. 800,000 engineers graduate out of Indian colleges every year, and 60% of them remain unemployed.
- These are youngsters who are talented, motivated, and desperate to gain experience. A route that many of the enterprising ones have taken is to startup. Indian startups operate in a business friendly atmosphere, which will likely continue, even if a different political power comes to parliament in 2019.
- No matter which party comes to power, they will tread the safer path and look toward helping startups and toning down negative events that seem to be taking place every day. This can only mean good things to those who want to outsource to India: regardless of who comes to power, startups will continue to function smoothly, with state sponsorship.
- The central and state governments will continue to encourage foreign companies to invest in India.
- Doing business in India is easier than you might think: despite all the linguistic debates that take place in India, English continues to be the lingua franca of the educated, and of the white-collared professionals.
- India is chaotic, and is an enigma to Indians themselves. Yet, elections take place on time, businesses run smoothly, and there is a humongous pool of talented youth ready to work for a comparatively lower cost than their peers in the US or UK.
Don’t miss the bigger picture
We must remember, outsourcing has existed in various forms throughout the history, and it began to be called ‘outsourcing’ after the advent of the Internet in 1990s. Since then, political parties have come to power, lost parliament seats, senators have fallen and risen, but the Indian IT industry has only grown in size and stature. With its recent focus on R&D and innovation, India has already moved toward being a tech leader, instead of just remaining the world’s back office, which it still is.
If you are a North American business or someone based in Europe or UK; Trump, Modi, Theresa May, etc shouldn’t matter. Offshore outsourcing will continue to take place, and India is where the action is taking place. What is relevant is that there is a large pool of talented workers in India, and an ever-increasing number of innovative startups that are ready to work. Indian governments will continue to encourage startups too. Certainly, Trump’s new H1B visa changes and Indian governments’ focus on accelerating the growth of Indian startups are good for American businesses, American workforce, and Indian startups. Though it may sound contradictory, this is the best time to offshore projects and hire local. Why would you want to miss out on all these goodies?
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