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jeffolie

If you want to find an American high technology, then go to India.

GK

Jeffolie,

True. The reason for this is the rise in new-generation Indians with technical skills, unlike their parents. The country becomes a different country.

jeffolie

Indian work cheap and corporations outsource as fast as they can.

GK

Most of the outsourcing that can be done has been, however. People have been talking about outsourcing for 5 years, and the US unemployment rate is currently 4.9%.

4 million more jobs in the US than 2 years ago.

Plus, more and more news that salaries in India are rising very fast.

No worries for the US economy at all. It helps us, not hurts us.

Jason

"Most of the outsourcing that can be done has been done..."

Not true. Among very large firms, it is likely finished *until technology allows more transfers*. Among medium sized firms, however, outsourcing is just starting to take off. Look for outsourcing to wipe out significant portions of the worforce in the next 10 years, as more modest companies seek lower input costs (driven by demands from their larger multi-national customers).

"US unemployment rate is currently 4.9%"

Probably grossly undercounted. I heard a credible report today that the actual rate is at least 1.1% higher, and probably more realistically at 6.3+%. Also, workforce participation rates are hovering around 62-63% last I checked, which is absolutely abysmal, and at least partially explains low unemployment numbers.

"4 million more jobs in the US than 2 years ago..."

1) What types of jobs were gained? A large proportion of the US job gains are in low- or unskilled jobs (paying minimum wage). These jobs don't really help the US long-term, as they add little value.

2) Of all jobs "gained" in the US, how many are going to illegals? I have seen speculation (on Brad DeLong's weblog) that something like 2 million of those jobs are being filled in this manner. Every employed illegal is an American citizen that is unemployed. As an added bonus, illegals push down wages across sectors, as they will work at or below [a US citizen's] subsistence wages.

"Plus, more and more news that salaries in India are rising very fast..."

Doesn't help Americans very much. We don't export many consumer products, or luxury goods, so don't expect much out of increased [Indian]buying power. We do export some IT, some building materials, advanced industrial materials, and Ag. However, these are consumed by gov't/industry, not end users. Besides, these are also the same areas that India is trying to compete in, but with wage inputs that are 1/10 the US norm; other inputs being equal, and absent tariffs, US domestic comanies can't compete using domestic production. Our economy may get lower priced goods, but import competing domestic companies and workers will get badly harmed.

GK

Jason,

You have a typically pessimistic left-wing view, which is obviously wrong for many reasons.

'Outsourcing' has been going on for 4 years, yet the US has created 4 million jobs in the last 2 years.

What is funny is how the left insists all these jobs are low-wage jobs, yet all the gains in economic growth are going to the upper-class. How can both be true? They are mutually exclusive.

Plus, *average* wages are rising in the US anyway.

No matter how hard you try to insist that the economy is terrible just because Bush is President, that won't make it true. Your own pessimism is inhibiting your own chances of success in this economy.

Kosha

Jason,

To corroborate on what others have said, but to provide a more micro/single-corporation view if that may be more helpful -

I work for a global Management Consulting firm known for expertise in Operations Strategy, and 3 of the 5 cases I've worked on since joining have been focused on offshoring backoffice functions to India.

I can tell you specifically - the first was a major retail and investment bank that saved $42 Mn in the first year of the offshoring effort. These savings allowed them to free up cash which they have since pumped back into marketing, geographic expansion and other growth triggers. What did this translate to? 100s of new job opportunities in "next wave" type work available to US people as this bank fuels its growth faster due to the savings achieved from offshoring backoffice stuff to India.

Similarly, I worked on a case that saved a dying printing & publishing company by helping them achieve $6.1 Mn in cost savings from offshoring.

I am currently assisting a leading cosmetics company based out of NY offshore their call-center to India, which is expected to save them just south of $13 Mn. Their first priority for 2007 after realizing these savings is to launch a new line of cosmetics geared towards teens. Is that not a classic case of a "trade" so to speak of outsourcing the low-level jobs to create wealth which in turn leads to higher-level jobs in the U.S.?

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