Effect of Domestic Politics on Business Process Outsourcing (BPO)

In previous articles, we talked about how the ongoing global economic crisis coupled with domestic pressures affect the outsourcing of back office operations. In this article, we look at a hot topic and a burning issue in the West i.e. the hue and cry over outsourcing and shipping jobs overseas especially at a time when the domestic workforce is finding it hard to get gainful employment.

The basic issue at stake is the concern of the trade unions and workers in the US and Europe at what they perceive is an unfair shipping of jobs overseas when they are suffering. The argument goes that when the domestic workforce is unemployed, how the politicians can let business leaders’ ship jobs overseas to India. This is the so-called protectionist argument which states that outsourcing leaves the economy of the home country in a bad shape. Countering this argument is the pro globalizers who argue that outsourcing results in cost savings and other benefits like focus on higher value adding work.

The debate is essentially framed as between those who want the jobs to be kept in the US and Europe compared to those who see outsourcing as a necessary evolution for any economy to move up the curve.

The point here is that high minded arguments like the latter are hard to justify in recessionary times when the workers in the domestic sector are left without jobs and no hope of finding new ones. This issue which is always in the headlines thanks to newspersons like Lou Dobbs resonates in a presidential election year (like this year - 2012) when tempers run high and the outcry over outsourcing grows.

As can be seen from the past in the US, President Obama pushed for lesser outsourcing in some sectors and more outsourcing in other sectors. This twin pronged strategy was to ensure that American competitiveness stays intact and only those jobs that are deemed to be redundant in the US ought to be shipped overseas.

Contrast this position with that of the other presidential hopefuls like Mitt Romney who favors a blanket form of outsourcing where the CEO’s and the shareholders benefit but the ordinary worker suffers. In recent weeks, this has become the rallying cry for the Obama campaign team and this is a direct result of the compulsions of domestic politics which have a large say in determining the extent of outsourcing that can be done.

Finally, the outsourcing issue is also a very sensitive one as livelihoods of workers are at stake and hence any politician or media commentator ought to treat the issue in a delicate manner.

The point here is that apart from the posturing and rhetoric, an objective and a hardnosed analysis of the issue ought to be done so that partisan bickering and one-upmanship do not derail the debate.

In conclusion, it is indeed the case that American CEO’s and business leaders would find it increasingly hard to justify their pro outsourcing stance especially when the US economy is tanking and there are fewer jobs to go by.