US to stop outsourcing?

[bfp]

India's technology industry has attacked proposed new US legislation that bans the outsourcing of federal work to low cost countries arguing it is a protectionist measure contrary to the spirit of free trade.


The move by the US Senate coincides with decisions by a number of foreign companies to halt further outsourcing to India because of a new domestic tax ruling that would enable the Indian government to tax part of their worldwide earnings.

The US bill, which was passed by the Senate of Friday but has still to be signed by President George W. Bush before it becomes law, is the most significant attempt to stop outsourcing, a fast-growing industry trend that has led to the loss of thousands of highly-paid technology jobs in the US and become a hot political issue in a US election year.

Although US federal contracts account for only 2 per cent of India's IT earnings, the bill sends a worrying message to the Indian outsourcing industry, which has been lobbying hard to stave off protectionism.

Arun Shourie, Indian's information technology minister, said the bill damaged the outlook for talks on freer multilateral trade. Kiran Karnik, president of Nasscom, the umbrella body for Indian IT, said he "hoped wiser counsel would prevail" before the law was enacted.

The revenues from India's technology industry are forecast to expand by a third to $15.5bn in the year to March, with two-thirds of the growth coming from the US, as more companies in North America and elsewhere leverage India's high IT skills and low costs.

But US companies such as JP Morgan and General Electric, which have outsourced thousands of jobs to India, could be casualties of the controversial rule on the taxable status of foreign companies' outsourced units. This week Nasscom said three unidentified foreign companies with back office operations in India had frozen future outsourcing until "there was clarity".

The government circular, which is binding on the tax-collecting authorities, says a foreign company's global income would be taxable under India's double-tax treaties if that company's outsourced unit in India carries out "core revenue-generating activities." Non-core activities conducted at arm's length and at fair market value would be exempt.

Accountants say the ruling introduces artificial distinctions between core and non-core work. "This raises technical ambiguities that could lead to litigation," said one tax expert.

Experts say an accepted principle of global accounting norms is that double-tax treaties override domestic tax regulations. Foreign companies could therefore appeal to double tax pacts, which prevent the imposition of taxes from different countries on the same business, to circumvent the circular.

Nasscom has protested to the Indian government, arguing the measure is contrary to the government's tax-friendly stance towards a nascent, job-creating industry.

[johnny861]

That's interesting.

Our company currently is outsourcing non-core work to India...

But they are actually taking a loss in regard to ROI... The outsourcing is needed for a high priority contract with huge penalties if it is not delivered in time... And the outsourcing is the only cost effective way of getting this done in time...

[Hey Bubu]

Originally posted by johnny861
That's interesting.

Our company currently is outsourcing non-core work to India...

But they are actually taking a loss in regard to ROI... The outsourcing is needed for a high priority contract with huge penalties if it is not delivered in time... And the outsourcing is the only cost effective way of getting this done in time...

I was offered some contract work for designing of websites where I would do the basic layout and desing then that would be shipped to india to get coded and the project would be returned the very next day, 24hr turn around. It was an interesting concept that made sense. Never did work for them as I found a better deal but I could see, not only from a monetary stand point
why companies would outsource. However that still meant less jobs for people here.

Another funny annecdote, my buddy had a few computer issues, so he called Dell Techsupport. Around that time there were commercials showing all these techs working the night shift at Dell's offices which had a rather american look to them. When he finally got a tech on the line we found out the techs were based in India What happened to the tech's on TV????

We can't deny globalization but at the same time we should still help our market first.

[Ryan]

That's interesting. On the one hand, it seems totally logical that taxpayer funded jobs should be for Americans. On the other hand, we should always try to save as much of our taxes as possible, and this just doesn't jive with paying an American 5 times as much as a foreigner just to create a job at home. The only thing that should drive tax expenditures that which creates the largest average overall benefit for the taxpayer.

[Adam D]

I think it's a great idea. Federal (and state) jobs should be held by US workers.

[Krash]

And what will you all be saying when you get reciprocal legislation against AMERICAN companies?

Though I tend to agree with Adam, that tax revenue should be spent within the state, I also think that we should be getting as good a deal as possible for that revenue.

Your deficit is gonna rocket.

[Suckimus Maximus]

I am on the dell contract and yes, Hardware support is outsourced to india ....... and as for "High IT skills Low wage"

Thats bullshit, 90% of the hardware techs punt calls such as broken cd-rom drive door to us over here in software ALL DAY LONG. They DO NOT want to help the customer nor do they give a shit about quality customer service, They lie to customers all day long telling them that yes, They are going to transfer them to a tech that can help them do a dual install of redhat on the 20 machines they just bought and then help network those 20 machines.

We dont cover any of that, and WE wind up with the irrate customer explaining that the "man with the funny accent" didnt know what the hell he was talking about and lied to him.

Some of those people wouldnt know what a fucking hardrive is if I was to shove one up thier ass.

[randyc]

How does a trade deficit skyrocket when more trade stays here?

That's not logical.

I say fuck India. They're sure quick to tell us how we should run our country when they have people starving in the streets and fat cows running around. There is a class of people there that are slaves.

We paid good tax money to prop up IBM and so many other corporations so that they can farm out the work to the 3rd world? I think not.

They want to pay 3rd world wages and charge North American prices so that the CEO can profit more. Nice. Very patriotic.

[Krash]

Originally posted by randyc
How does a trade deficit skyrocket when more trade stays here?

That's not logical.

Not trade deficit, budget deficit.

[randyc]

How will we have a budget deficit from bringing work home?

When I was employed at my achieved level, I was paying in over 24k in taxes. Now, I make shit compared to what I made before. Like 55%. Of course, the taxes I pay in are far less as well.

If my field hadn't been mostly moved offshore, I would be where I was before paying in that much. Instead, I spent a year drawing off the dole. Now I don't make as much and don't pay in as much.

How does putting Americans back to work bring about economic ruin again?

[Krash]

Originally posted by randyc
How will we have a budget deficit from bringing work home?

When I was employed at my achieved level, I was paying in over 24k in taxes. Now, I make shit compared to what I made before. Like 55%. Of course, the taxes I pay in are far less as well.

If my field hadn't been mostly moved offshore, I would be where I was before paying in that much. Instead, I spent a year drawing off the dole. Now I don't make as much and don't pay in as much.

How does putting Americans back to work bring about economic ruin again?

So, the taxes that will be paid by the workers that reclaim these jobs will offset the increase in expenditure to PAY those wages will allow them to reclaim it, that right?

Coupled with more welfare payments due to the legalisation of X million illegals and less tax coming in from GWB's tax cuts, you'll excuse me, and of course show me, how the budget deficit is NOT going to balloon out of all control, won't you?

[randyc]

Well, in my opinion, we need to stop worrying about who's sneaking into Iraq and start worry about who's sneaking in here.

The ILLEGAL ALIENS need to be found and repatriated to their nation of origin. This amnesty plan is a joke and a slap in the face to all immigrants who pay lots of money and spend lots of time going through the proper channels to come here LEGALLY. It's also an insult to me, personally, to say that these are jobs that Americans won't do. I've worked in agriculture, hauling hay. I washed dishes when I was working my way through college. I poured concrete and was a carpenter. These are all jobs I supposedly won't do. The truth is that I wouldn't even be as far as I am now without having done these jobs.

Now, I'll ask you this... What do you think we did when IT wasn't being outsourced to the 3rd world? That was the time when the economy was BOOMING. I could quit a job on Friday and pick up a new one by Tuesday. That's not an exaggeration. I've done it.

The national budget isn't negatively impacted by corporations treating their employees better than garbage cans or filing cabintes... commodities to be tossed when they are considered no longer economically viable.

I haven't seen any cost savings passed on. People still pay $140 for sweatshop tennis shoes. They'll pay $600 for a copy of sweatshop Microsoft Office. As I said in my previous post, they are double dipping by paying 3rd world wages with no environmental, health, or rights restrictions. They charge North American prices for these rent-slave built products. I would gladly pay more for an item of higher quality made here. I do whenever offered that option.

[Suckimus Maximus]

Originally posted by randyc


Now, I'll ask you this... What do you think we did when IT wasn't being outsourced to the 3rd world? That was the time when the economy was BOOMING. I could quit a job on Friday and pick up a new one by Tuesday. That's not an exaggeration. I've done it.

*raises glass*

Heres to memories of making 40k a year out of high school with only a GED.