Bush unlikely to veto outsourcing ban Bill
NEW DELHI: The passage of the omnibus-spending Bill with a provision to ban outsourcing by the US Senate has highlighted the central role that outsourcing or more importantly the loss of American jobs will play on the forthcoming US elections.
The Senate ban is effective only on the US companies while they are executing federal projects.
This would mean that firms in the US which win federal contracts can not subcontract the project to companies outside the US. (Can America do without outsourcing?)
Even as industry bodies like Nasscom have said that though the passage of the Bill was unfortunate, it would not affect India much, fact remains that any doubts as an issue outsourcing is a political livewire has been dispelled.
Nasscom says that the effect on Indian companies will be minimal because federal projects comprise merely two per cent of India’s IT exports.
It is quite clear then that besides the loss of American jobs, another issue – whether American taxpayers should bear the cost of shipping jobs to other countries – will also keep cropping up till election day in November this year.
So where do the various White House aspirants as well as the present occupant stand on the issue of outsourcing?
Though US President George W Bush has said that his administration will not try to stop companies from sending IT work offshore, there is very little chance that he will veto this Bill.
With the spotlight increasingly on Senator John Kerry, it is interesting to understand where he stands on the issue of overseas migration of American jobs. Senator Kerry has been the most vocal and lucid on the issue.
Unlike some fellow candidates, he has not dealt with outsourcing only in the manufacturing sector or in an omnibus manner. He has made clear his position on outsourcing of services as well. To begin with, he introduced a Bill in the US Senate last year that would require call centre service agents to identify the country where they are located at the beginning of each call.
According to Kerry, in the current economy, consumers increasingly use the telephone or Internet to buy goods and services, inquire about transactions and bills, and get technical support or other information. More than 70 per cent of customer interaction occurs in call centres. According to him, an estimated six million Americans work in call centres.
“In recent years, many call centres have shifted operations overseas, to places like India, Vietnam, and the Philippines. The US has lost 250,000 call centre jobs since 2001.”
He says that, besides wanting to keep the call centre jobs in the US, he wants to provide a measure of security for telephone and Internet consumer transactions. Therefore the consumers should have a right to know where they are calling.
Like fellow Democrat General Clark, Kerry says he will close every single loophole that gives companies incentives to move jobs abroad. This would include stopping American companies from setting up virtual headquarters in foreign countries just to avoid paying US taxes and stop tax breaks for companies that move jobs abroad.
At the same time he has said that he would provide a corporate rate reduction to manufacturers who produce goods in the US propose a new jobs tax credit to encourage manufacturing companies to stay and expand in America. When a manufacturing company creates jobs above their 12-month average, the payroll taxes of the new employees will be refunded for two years.
In line with the Bill passed by the Senate last week, Kerry opposes the idea of using American taxpayer dollars to send entry-level service jobs overseas.
Kerry believes that the US federal contracts where possible should be performed by American workers.
Among the other Democrat candidates, General Wesley Clark takes a position that understands the economic forces that drive American companies to outsource work to countries where labour cost is low. To counter this overseas migration of jobs, Gen Clark has proposed tax credits to business if they hire Americans full time.
Howard Dean, former Vermont Governor, while not making any direct reference to outsourcing, says that American companies must meet their need for workers at all skill levels without pitting Americans against foreigners.
Other Democratic Party candidates like John Edwards have been silent on outsourcing. However, records show that Edwards voted to increase the H1-B visa cap in 2000. Joe Lieberman, who also supported increasing the number of H1-B visas in 1998 and 2000, says that he would like to curb the abuse of visa programmes.
Like Kerry and Clark, he advocates tax credits for companies that create new jobs in the US.
The Economic Times
The Senate ban is effective only on the US companies while they are executing federal projects.
This would mean that firms in the US which win federal contracts can not subcontract the project to companies outside the US. (Can America do without outsourcing?)
Even as industry bodies like Nasscom have said that though the passage of the Bill was unfortunate, it would not affect India much, fact remains that any doubts as an issue outsourcing is a political livewire has been dispelled.
Nasscom says that the effect on Indian companies will be minimal because federal projects comprise merely two per cent of India’s IT exports.
It is quite clear then that besides the loss of American jobs, another issue – whether American taxpayers should bear the cost of shipping jobs to other countries – will also keep cropping up till election day in November this year.
So where do the various White House aspirants as well as the present occupant stand on the issue of outsourcing?
Though US President George W Bush has said that his administration will not try to stop companies from sending IT work offshore, there is very little chance that he will veto this Bill.
With the spotlight increasingly on Senator John Kerry, it is interesting to understand where he stands on the issue of overseas migration of American jobs. Senator Kerry has been the most vocal and lucid on the issue.
Unlike some fellow candidates, he has not dealt with outsourcing only in the manufacturing sector or in an omnibus manner. He has made clear his position on outsourcing of services as well. To begin with, he introduced a Bill in the US Senate last year that would require call centre service agents to identify the country where they are located at the beginning of each call.
According to Kerry, in the current economy, consumers increasingly use the telephone or Internet to buy goods and services, inquire about transactions and bills, and get technical support or other information. More than 70 per cent of customer interaction occurs in call centres. According to him, an estimated six million Americans work in call centres.
“In recent years, many call centres have shifted operations overseas, to places like India, Vietnam, and the Philippines. The US has lost 250,000 call centre jobs since 2001.”
He says that, besides wanting to keep the call centre jobs in the US, he wants to provide a measure of security for telephone and Internet consumer transactions. Therefore the consumers should have a right to know where they are calling.
Like fellow Democrat General Clark, Kerry says he will close every single loophole that gives companies incentives to move jobs abroad. This would include stopping American companies from setting up virtual headquarters in foreign countries just to avoid paying US taxes and stop tax breaks for companies that move jobs abroad.
At the same time he has said that he would provide a corporate rate reduction to manufacturers who produce goods in the US propose a new jobs tax credit to encourage manufacturing companies to stay and expand in America. When a manufacturing company creates jobs above their 12-month average, the payroll taxes of the new employees will be refunded for two years.
In line with the Bill passed by the Senate last week, Kerry opposes the idea of using American taxpayer dollars to send entry-level service jobs overseas.
Kerry believes that the US federal contracts where possible should be performed by American workers.
Among the other Democrat candidates, General Wesley Clark takes a position that understands the economic forces that drive American companies to outsource work to countries where labour cost is low. To counter this overseas migration of jobs, Gen Clark has proposed tax credits to business if they hire Americans full time.
Howard Dean, former Vermont Governor, while not making any direct reference to outsourcing, says that American companies must meet their need for workers at all skill levels without pitting Americans against foreigners.
Other Democratic Party candidates like John Edwards have been silent on outsourcing. However, records show that Edwards voted to increase the H1-B visa cap in 2000. Joe Lieberman, who also supported increasing the number of H1-B visas in 1998 and 2000, says that he would like to curb the abuse of visa programmes.
Like Kerry and Clark, he advocates tax credits for companies that create new jobs in the US.
The Economic Times
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