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Re: Thoughts on Outsourcing

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G Vishwanath wrote:
You need the world's market for your products too. If you put a stop to Indians doing work for USA, India
will put a stop to USA selling its proudcts to us. We don't have products to sell to you. We have only our skilled manhours to sell to you. Coca Cola, Pepsi, MacDonalds, Microsoft, Ford, Boeing, IBM, HP and  Hollywood will be some of the big names affected if the Indian market is denied to them. All these firms do roaring business in India and no one is objecting. None of them sell us anything that is essential to our needs.
You do not need Tit-for-Tat in economics. Human emotions and more so human egos have no role whatsoever to play in laws of nature. Why should we stop buying US products? We would be idiots to do that (we have already been that for too long) ...why pay more to buy something which can be had for less. By doing so, we would be shooting ourselves in the foot. Have you forgotten the 70's, when we had 2 choices for buying a car, Premier & Ambassador, both slightly better than a bullock-cart but priced higher than a Toyota, and a waitlist of 5 years. That is the resulting scenario when you start protecting your industries. It took only 40 years for Russia & the Eastern block to collapse because of their protectionism. We had slightly better luck, as we were never fully socialist, but only partly so.
If US wants to follow the same route and ban or put tariffs on services industry, it's their problem. Let them do so and price themselves out of the market. Just consider that they stop outsourcing software development. What would be the immediate impact. An average price rise of at least 10-20% of all the US made software. Just consider, what impact that will have on US economy. I agree there will be a short term negative impact on the Indian IT industry, till some people start developing their own software instead of doing it for Bill Gates. And someone might come up with Indows (which will obviously be priced at 1/3rd of Windows). Maybe initially it will have bugs, but it will certainly sell like hot cakes in the chimpanzee countries like ours & so many others ... which will further bring it's price down & better versions will be released... and at the same time Microsoft getting affected by all the lost market and rising manpower costs will have to hike the price of Windows .... can you see where this is leading to.
Its a matter of perspective. We have learned the hard way and paid dearly for it. If the teacher is having doubts about his own teachings, he obviously has the freedom of testing them. No need for Tit-for-Tat.
Pankaj Gupta
Structures Online