Stung by double digit unemployment rate despite the over trillion dollar stimulus, even as President Obama is extending unemployment benefits and looking for other ways to generate job growth, a few American cities have devised a seemingly smarter way of generating more jobs. They are wooing top Indian IT companies to set up operations in their cities so that more Americans can be hired by these Indian companies.
So in a way the job crisis has managed to turn the table pretty quickly. Indian IT companies, which as recently as in March last year were blamed for taking jobs away from America, are now being actively courted for expanding operations in USA. The hope is that to compete against their U.S. rivals -- like IBM and Accenture -- the Indian IT companies will hire more Americans and thus create more jobs.
However, the moot question is that while some these cities are throwing millions of dollars in tax credits to attract the Indian IT companies, could this money be more effectively spent in focusing on infrastructure -- say on wider penetration of broadband?
Some think so.
But first here's the big news. Ohio, Dallas, Atlanta, Minneapolis and Tallahassee created quite a bit of furor in the outsourcing world when Bloomberg reported a few days back that these cities were actively courting top Indian IT companies like TCS, Infosys and Wipro for setting up or expanding operations in these cities.
Ohio Governor Ted Strickland (photo left), as it was reported, has even gone a step further by throwing in $19 million in tax credit to TCS for expanding its operations in the Cincinnati suburb of Milford. This will allow the Indian tech company to ramp up its head count from 300 to 1000.The TCS operation, reported Bloomberg, has already picked up 250 of its current 300 employees from places like Ohio State University, the University of Cincinnati, and other nearby schools. And it is being assisted in moves to grab a larger bite of the government and health-care work, where the transfer of data overseas are prevented by laws.
Dallas, Atlanta, Minneapolis, and Tallahassee too are following a similar strategy. Atlanta, for instance, is encouraging Wipro Technologies, which now has 350 employees -- nearly 300 of them Americans -- to expand its operation in the city. And Dallas is encouraging Infosys to set up an operation to target Texas' expenditure of billions of dollars for outsourcing work in 2010.
But smart as the policy may appear, it has not pleased the veterans. Christopher Hytry Derrington, the co-founder of Rural America Onshore Sourcing says; "While I am glad that jobs are being created in America, they are just a drop in a bucket in solving the economic and unemployment crisis that is in America right now."
He added that a lot of people view these brick and mortar centers as basically a conduit to bring over Indian labor at greatly reduced Indian rates.
Christopher's views are worth noting. With business development centers in Wisconsin, Ohio and Kentucky, Rural America Onshore Sourcing is a USA-owned and operated on-shoring company that provides business process outsourcing services using lower cost rural based professionals so that American companies don't have to send projects offshore or use expensive urban vendors.
Christopher is also peeved with the tax credit that the Ohio governor is offering to TCS. "What Strickland should be doing, that we do not see, is focusing more on bringing broadband to all of rural Ohio that would create more jobs than what all these Indian companies could bring in," he says.
To one Cincinnati resident, the wooing appears to simply be a gimmick just to gain political mileage. "The business community in Cincinnati is viewing these announcement with a little bit of wariness because it might reduce pay rates overall while creating very little impact in improving the overall job scene," said one local business-owner requesting anonymity. "After all politicians love being in the spotlight and love making announcements."
That may be true but for the time being, city administrators may have set their visions much beyond what a commoner can see.
For instance, according to Bloomberg, if a Senate bill introduced in April makes it through Congress (the bill seeks to bar companies with more than 50 U.S.-based employees from using temporary visas for more than half their U.S. workforce), these Indian IT biggies that employ thousands of Indians in the U.S. on temporary visas would be forced to employ many Americans.
Jobs created by the Indian IT companies then would be not only long-term, but could also increase in numbers, Strickland said in the Bloomberg report.
Subscribe to this blog's feed
This is a smart economic development plain and simple. The US needs the education, skill set, experience, and talent to advance US technology innovation. The continued growth of this market vertically and horizontally will ensure a continued technology economic growth engine for many years to come. We can find a balance with the broadband and IT talent. Politically perceptive companies should look to partner and create incentives with local municipalities, states, and federal sectors. Public and private partnerships can work with the right combined team and joint objectives.
I think the states have absolutely the right idea here. Supporting the development of IT centers in their states with appropriate tax incentives will create more jobs in the US, which, otherwise may have ended up offshore. It doesn't really matter if they're citizens or visa holders frankly, because the net effect is greater local employment and commerce.
At Systems In Motion (we're a Silicon Valley and Ann Arbor, MI based IT Services company) we've added over 55 new jobs in the last 3 months, by effectively providing an 'Inshore' alternative to global sourcing for IT services. The State of Michigan has been very constructive in helping us launch the Ann Arbor delivery center as well.
The more focus we have on this model, the greater the net positive impact on US businesses and local economies.
Kudos to the Governors.
Debashish Sinha
Chief Marketing Officer
Systems In Motion
www.systemsinmotion.com
Intelligent rational thinking, as opposed to from emotional opinions is the need of the day. The US planners are absolutely on the right track. The flow of knowledge, skills and the right talent will aid development of jobs and growth of local economies.
It is a global trend and these states would have taken the first steps in a global competition for such ideas.
And I am sure it will not be only US states or Indian companies which will benefit. In a knowlege economy, the governments and organisations will compete for the business and if the local economy benefits as a result, so be it.
Biswashis Gantayet
Head - Public Services
Mahindra Satyam, UK & Ireland
Often we forget the little guy, the SMB, in our discussions of the comings and goings of the Internet marketing industry. Sure there are times like this when a report surfaces talking about their issues and concerns but, for the most part, we like to talk about big brands and how they do the Internet marketing thing well or not so well.
www.onlineuniversalwork.com
Giving these large Indian Off-shore companies any more US Tax dollars is nothing short of robbery. Big Corporations have sent millions of dollars to India. If the Indians want a bigger stake in the US, let them invest.
This is all just a bigger "on-ramp" in each of these local markets for the big Offshore firms to suck more work out of the US, and they now want to use more US Labor (since their H1B Visas can't be renewed)to do this.
Not only do we need to keep these large Indian firms out of the US, we need to expose all of the offshore activity the big US Corporations are doing so that we can vote with our wallets. It wasn't until Honda and Toyota started making cars in the US, that more Americans got on board.