The Economic Times states that America has lost nine million jobs since 2007. The bill that ends tax breaks for companies that outsource could mean a slowdown for India's outsourcing business. Many media sources have figures on how many jobs have been lost in America. Wikepedia states that the number of jobs lost in the United States to outsourcing is less than 1%. The question is, which jobs are safe? Obama has his stand to protect American jobs which is very admirable. However, if an American wants $100 per hour to do a task that a Bangalorean can do just as well for $15 per hour, how long can you stop companies from outsourcing. Whether we have anti-outsourcing bills or not, companies will find a way to outsource if they think they can get a competitive advantage.

Outsourcing is the great global equalizer. Eastern Europe had very low income until the iron curtain was raised. They did cheap labor for a while, and then their labor rate went up to a much higher rate in only a decade. Sure, the rate for labor is still less expensive in Eastern Europe, but not so cheap that German's are rushing to Hungary to stock up on butter and get their web design done. The economies have equalized to a greater degree. Russia is a different story though due to political reasons.

The fact is that we have been outsourcing various types of jobs in America since the 1980's in large quantities. So, for every job we outsource, there is one less job for an American. By straight math, after 30 years of outsourcing, we should all be unemployed now twiddling our fingers. But, it doesn't work that way. The fact is that our economy generally grows, although there are some interruptions from temporary recessions. We lose jobs, but still grow. Foreign countries also purchase products from us which helps us have create more jobs. Our unemployment rate has been 5-10% for the last ten years, so we haven't lost all of our jobs.

So, how do we protect ourselves in the long run?
When I try to get work done from American companies, the prices are sky high, and the workers are so busy, that they have to squeeze me in after a lot of pressure from me. I think that Americans don't have time nor have the desire to work for me and that I'm compelled to use Indians. If someone here is $100 per hour for a particular task that can be done in Chennai for $5 per hour, how long will I hire the person here? The quality of the work is not as high overseas which is why the whole world doesn't just start outsourcing. But, for $10 per hour, tasks that they can handle well will be assigned. More sophisticated tasks might be reserved for the more experienced and sophisticated american counterparts. If Americans learn to charge less, deliver better service, and be more flexible in their hours instead of saying, "Sorry, lunch break, I can't talk to you", outsourcing would slow down. We need to compete for business more over here.

What will happen in the long run?
Eventually countries like India will have very expensive labor, and it will no longer be profitable to outsource to them. In fact, most of the world will be equalized in about twenty years except for politically unstable countries. Big business doesn't want to invest in dangerous countries, so they will remain poor. In the long run, Americans might be charging $60 per hour, and Indians $45 per hour. These figures are close enough that outsourcing doesn't seem that attractive, unless the Indian workers have more talent in particular areas. Lets say the year is 2030, and all countries have similar per capita GNP. However, Indians are known for their talent in database, Argentinians are known for their art, Danish for their furniture, and Americans for their communication skills. We might all outsource with each other, each country hiring people from other countries to do what they are best suited for. Plato's dream would have come true, but on a national level.

Instead of stifling the outsourcing industry, it makes better sense to demand that countries like India and the Philippines that engage in outsourcing, purchase an equal amount of labor from America. We could sell them manufacturing plants, weapons, bullet trains, or other services that we are well optimized for. An equal swap would make everyone happy and make the world a better place.

Its part of Obama's goals to enhance sales of U.S. made products and services in India which is a reasonable and practical goal. But, there is resistance in India to this idea among Indian politicians. So, it looks like both America and India are somewhat unwilling to engage in free trade with each other. It seems that everyone's economic future will be brighter if there is worldwide free trade instead of protective backwardsness.