An Outsourcing Prediction on Year 2007

Last week we looked at comments made by President Bush on the question of outsourcing. Bush is clearly enthusiastic about the practice, and his trip to India has been a ringing endorsement of that country's significance and value to the United States.

Consider this Presidential statement: "India's middle class is now estimated at 300 million people. Think about that. That's greater than the entire population of the United States. India's middle class is buying air-conditioners, kitchen appliances and washing machines, and a lot of them from American companies such as GE and Whirlpool."

According to Bush and the American companies on whose behalf he visited India, the U.S. has great interest in India's middle class. That shows you which way the wind is blowing. It certainly isn't in the direction of the American IT/BPO middle class.

There isn't going to be any kind of outsourcing backlash at a U.S. governmental or business level, because the government has a deep strategic interest in India (enough to endorse the country's weaponized nuclear program) and the business community wants to continue to pay its workers less money, which means tapping India for more outsourcing. The only kind of outsourcing backlash possible is one that arises from those disenfranchised by the phenomenon, and we now know that there are simply too many political and economic obstacles in the way of such a backlash.

President Bush's visit to India should therefore be seen as the end of the beginning of the first stage of offshore outsourcing, and the beginning of a second stage in which more jobs (including the national security job of counterbalancing China's power in Asia) will be targeted for Indian export. Historically speaking, this simply means that India is now the junior representative (or, in the local vernacular, "chamcha") of the United States rather than, as in previous centuries, of Great Britain.