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The slippery fundamentals of the fight against outsourcing

Published

9 years ago

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The slippery fundamentals of the fight against outsourcing

[vc_row][vc_column][vc_column_text]Even while the US Congress sees the introduction of two more Bills seeking to put an end to the practice or at least limit it significantly, considerations involving cost, pricing, market and talent put a question mark on the wisdom of the proposed legislations

By Sujit Bhar

After the H1B scare, now there is the scare of an Outsourcing Prevention Act from the US. As far as India is concerned—simplifying it as much as possible—these are likely to affect, basically, two categories of workers. The first is technical, hence highly educated, people going to the US for specialised jobs; the second is people who have been pulling even blue collar jobs out of the US, assisted by US companies who see sense in the cost-benefit analysis.

If we forget the Trump ethos for a while, and also disengage from Bernie Sanders’ ideas of why outsourcing should be stopped, looking only at the general American perspective instead, we observe some very interesting developments of late.

We will be pitting this American perspective, not only against an Indian perspective, but also against the world perspective.

As per the US 2017 General Schedule (GS) Pay Scale, as published by the Office of Personnel Management, the pay scale, escalated in ten steps, would be US $ 23,171 per annum.

The GS Pay Scale is the predominant pay scale within the US civil service and is an indicative salary for the majority of white collar personnel (professional, technical, administrative and clerical) positions. And this is actually a huge section of federal civilian employees—as per late 2004 readings, this comprised 71 percent of federal civilian employees.

We are considering the lowest of the GS grade, which is GS-1, and we are taking a simplistic view.

If we consider the general US dollar-INR exchange rate prevalent as of February 6 (rounded off at 67) we see that US $23,171 per annum translates to Rs 15,52,457. This is the lower end of GS. At the absolute higher end, GS goes up to $134,776. That is the ceiling, so to say.

Without comment we present here the Sixth Pay Commission’s recommendations (mostly adopted) for top level government employees (S-16 and above). Feel free to compare from the table below:Sixth-Pay-Commission-Revised

In the US, the GS Pay Scale does not refer to tech-specific jobs, which means they are not specifically H1B. Hence this will fall in the ambit of the second act on general outsourcing.

The World Picture

Regarding tech jobs, we put this in the backdrop of the world picture. Around the world, one general finding (late 2016) shows that 51 percent techies existed in the $60,000-80,000 bracket, while only eight percent in the $120,000-140,000 bracket. That is the worldwide trend.

This tells us two things. The first is, if the new act on H1B raises the minimum rate to $130,000, it will be extremely lucrative for techies around the world to gravitate towards the US. The second is that when majority of the world of techies, as talented, exist in the $60,000-80,000 range, sensible companies would want to gravitate towards that cost level.

Regarding non-tech jobs, the following can be the reading. According to the Census ACS survey, the median household income for the United States was $55,775 in 2015, the latest data available. 2016 Census ACS data (including 2016 national household income numbers) will be released in September of 2017. For argument’s sake, we assume that the median of 2015 has remained unchanged.

Since this covers all white collar jobs, including tech, what justification does any American company have to live in this high overhead ecosystem?

Beyond H1B

Let us consider another set of available data (Link: http://www.statisticbrain.com/outsourcing-statistics-by-country/ ), outside the H1B environment. The US has outsourced 53 percent of manufacturing jobs, 43 percent of IT Services, 38 percent of R&D, 26 percent of Distribution and only 12 percent of Call or Help Centres.

And here are the top reasons as to why companies outsource.

  • Reduce or control costs: 44%
  • Gain access to IT resources unavailable internally 34%
  • Free up internal resources 31%;
  • Improve business or customer focus 28%;
  • Accelerate company reorganization / transformation 22%;
  • Accelerate project 15%; Gain access to management expertise unavailable internally 15%;
  • Reduce time to market 9%.

What does that mean? The top two reasons for outsourcing are cost and access to IT resources. Will the possible new legislations be able to create a level playing field for US companies, vis-a-vis companies from other countries?

With even the median household income in the US staying beyond levels that can be attained any time soon by countries outsourced to, cost will never be attained in the manufacturing sector. If we consider the internal consumption of the US, it will not be able to support the huge production capacities needed to be set up for manufacturing to become cost-effective.

Let us consider a typical manufactured article, such as, say, Barbie dolls. If America exports, it will lose the pricing wars from countries like China and even Bangladesh (textiles) and India (IT and pharma). Where will the excess production of Barbie dolls be targeted towards?

If we consider IT, there aren’t as many good-talent techies available in the US to support the fundamental political principles of Trump and Sanders. Which, in turn, will mean a compromise on quality. If Windows 11 came with, say, a plethora of incurable bugs, where will the market be? Debugging is a time-consuming, repetitive job that many Americans just might not like, to put it mildly.

So, if 53 percent of the outsourced manufacturing jobs and 43 percent of the outsourced IT services jobs are to come back into the US again, the US has to set up massive facilities within the country and then somehow create the huge market capable of gobbling up the huge production that will ensue.

We do not wish to term Sanders’ idea as ‘ludicrous’, as Tim Worstall has written in Forbes, but we certainly wish Sanders and Trump all the luck in their respective ventures.

Related read: Will the H1B Bill help or hurt the US?[/vc_column_text][/vc_column][/vc_row]

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Union Budget 2026 highlights: Nirmala Sitharaman Raises Capex to Rs 12.2 Lakh Cr, West Bengal Gets Major Allocation

Finance Minister Nirmala Sitharaman is presenting the Union Budget 2026 in Parliament today. Follow this space for live updates, key announcements, and policy insights.

Published

1 day ago

on

February 1, 2026

By

Finance Minister Nirmala Sitharaman arrives to present Union Budget 2026

Finance Minister Nirmala Sitharaman will shortly present the Union Budget 2026 in the Lok Sabha, marking her ninth consecutive Budget. The annual financial statement is expected to outline the government’s policy priorities, reform agenda and spending plans for the coming year. Stay tuned for live updates, key announcements and immediate reactions as the Budget speech unfolds.

Finance Minister Nirmala Sitharaman tabled her ninth Union Budget today, beginning her speech at 11 am.

Nirmala Sitharaman is set to present her ninth Union Budget today, with the finance minister scheduled to begin her speech at 11 am.

Budget 2026 live updates: Presenting the Union Budget for 2026–27, Finance Minister Nirmala Sitharaman said the occasion coincided with Magh Purnima and the birth anniversary of Guru Ravidas. She noted that over the past 12 years, India’s economic journey has been defined by stability, fiscal discipline, sustained growth and moderate inflation.

The budgeted fiscal deficit for fiscal 2026 is estimated at 4.4 per cent of gross domestic product (GDP)

Planned capital expenditure this fiscal year Rs 11.2 lakh crore

Rare earth corrdiors in Odisha and Kerala

Hi-tech tool rooms to be set up by PSUs

Construction equipment scheme to be launched

Container manufacturing scheme for Rs 10,000 crore over 5 years

Rs 10,000 crore SME Growth Fund

Semi-conductor mission to get Rs 40,000 crore

Rs 12.2 lakh crores for infrastructure development

Dedicated RITES to repurpose land of Central PSUs

20 new waterways over next 5 years to be connected

7 high-speed corridors on rail

High-level committee on banking for next phase of Viksit Bharat

Capital expenditure hike of to ₹12.2 lakh crore in Budget 2026, with West Bengal receiving a significant share of allocations.

Mahatma Gandhi Gram Swaraj Initiative aimed at boosting the khadi, handloom, and handicrafts sectors.

High-speed rail corridors: Mumbai-Pune, Pune-Bengaluru, Hyderabad-Bengaluru, Chennai-Bengaluru, Delhi-Varanasi, Varanasi-Siliguri, Pune-Hyderabad

Five university campuses to be established near industrial corridors

Lakpati Didi program expanded in Budget 2026 to reach more beneficiaries across India.

Fiscal deficit for FY26 revised to 4.4%; Budget Estimate for FY27 set at 4.3%.

TCS on overseas tour packages cut to 2% to ease travel costs

Tax holiday to foreign companies that provide cloud services by setting up data centres in India till 2047

17 cancer drugs exempted from import duties

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Union budget 2026 to be presented on Sunday with special trading session

The Union Budget 2026 will be presented on a Sunday for the first time in over two decades, with NSE and BSE announcing special trading sessions for the day.

Published

2 days ago

on

January 31, 2026

By

Nirmala Sitharaman

For the first time in more than two decades, the Union Budget will be presented on a Sunday. Finance Minister Nirmala Sitharaman is scheduled to table the Union Budget for 2026 in the Lok Sabha on February 1 at 11 am, even as the day is usually observed as a holiday for government offices and financial markets.

February 1 falls on a Sunday this year, raising questions about market operations and investor response. To ensure uninterrupted trading and immediate market reaction to budget announcements, stock exchanges have announced special arrangements for the day.

Markets to remain open on budget day

Both the National Stock Exchange and the Bombay Stock Exchange have confirmed that markets will remain open on February 1. The NSE has announced a special trading session, with the pre-open market scheduled from 9 am to 9:08 am, followed by normal trading hours from 9:15 am to 3:30 pm.

The BSE has also declared the day a special trading day, with regular market hours applicable. Trading is expected to continue across equity, derivatives, and futures and options segments.

What the Sunday budget means for investors

A weekend budget presentation is seen as offering certain advantages for market participants. With trading active on the same day, investors will be able to respond to policy announcements immediately rather than waiting for the next working day.

The Sunday timing also gives investors, analysts, and financial institutions additional time to go through detailed proposals, including tax changes, fiscal deficit targets, and sector-wise allocations. The extended window for analysis may help reduce sharp, headline-driven reactions and encourage more informed decision-making.

With fewer competing developments on a non-working day, budget announcements are also expected to receive more focused attention from markets and stakeholders.

Parliamentary schedule and key milestones

The Economic Survey is expected to be tabled on January 29, ahead of the budget presentation. The Budget Session of Parliament began on January 28 with the President’s address to a joint sitting of the Lok Sabha and Rajya Sabha.

The upcoming budget will mark Nirmala Sitharaman’s ninth consecutive Union Budget. It will also be India’s 80th budget since Independence. Since 2017, Union Budgets have been presented at 11 am on February 1, following a timing change introduced during the tenure of former finance minister Arun Jaitley.

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Modi says right time to invest in Indian shipping sector; meets global CEOs

Published

3 months ago

on

October 29, 2025

By

PM Narendra Modi

Prime Minister Narendra Modi on Wednesday exhorted global investors to take bets on the Indian shipping sector, pointing out that this is the “right time” for such a move.

The Prime Minister also met a select chief executives of global majors, including DP World and APM, at a specially convened meeting on the sidelines of the India Maritime Week 2025 held here.

“For all of you hailing from different countries, this is the right time to work in the Indian shipping sector and also expand (your presence),” Modi said during a public address before the closed-door meeting with CEOs.

Modi listed several targets being chased by India in the maritime sector over the next few years, and underlined the importance of the global community in the same.

“You all are an important partner who will help us achieve all our aims. We welcome your ideas, innovations and investments,” Modi said.

He said that India allows 100 per cent foreign direct investment in the shipping and ports sector, and also provides incentives under the “Make In India, and Make For The World” vision.

Addressing an audience, including leaders of various companies, the Prime Minister affirmed India’s commitment to strengthening the supply chain resilience at a global level.

He also said that India is engaged in creating world-class mega ports, and cited the work undertaken on the Vadhavan Port to the north of the financial capital, which entered the top-10 firms in the world on the first day.

The government is also looking to grow the capacity at 12 major ports by four times and increase India’s share in containerised cargo at the global level.

Later, Modi held a meeting with top CEOs of shipping sector companies from across the world.

As per people in the know, he met AP Moller-Maersk Chairman Robert Maersk Uggla, DP World Group Chairman Sultan Ahmed bin Sulayem, Mediterranean Shipping Company Chief Executive Soren Toft, Adani Ports and SEZ Managing Director Karan Adani and French company CMA-CGM’s Senior Vice President Ludovic Renou.

The participation from over 85 countries in the IMW sends a strong message, Modi said, noting the presence of CEOs of major shipping giants, startups, policymakers, and innovators at the event.

The Prime Minister also thanked Port of Singapore (PSA) for the nearly Rs 8,000 crore investment in the Jawaharlal Nehru Port Authority’s fourth terminal, pointing out that this is also the largest FDI in the port sector in India.

Modi said more than 150 new initiatives have been launched under the ‘Maritime India Vision’, resulting in nearly doubling the capacity of major ports, a substantial reduction in turnaround time, and a new momentum in cruise tourism.

—PTI

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