Several years ago in Delhi, I called a pest control firm to treat our Mayur Vihar apartment for termites.
A South Indian gentleman with a pleasing smile arrived with canisters of chemicals and a large syringe. He went about his task meticulously and, every time he sprayed, a mist settled on everything.
I asked him if all this would really work. Breaking into a comforting grin, he said, "Sir, have no worry whatsoever. This is very strong stuff. It is totally banned in the United States."
I edged out of the room, as he reared the syringe for another round of dousing.
I remembered this incident last month when, after I gave a lecture in Helsinki on global labour standards, I got into an animated debate with some of my audience on what if any should be the common standard for labour markets in the world.
A globalised world, with one country's goods, capital, and pollution flowing into another, will inevitably need some common norms and laws.
But as my pest-control agent's answer amply illustrated, one man's poison can be another's assurance. Common standards in a world that is as inequitable as ours will raise issues of contention that we will have to deal with.
One area where this is becoming a serious problem is that of business process outsourcing. This has been a source of hope and progress for many developing nations, such as India, China, and South Africa.
With technological breakthroughs in electronic communication and the steady increase in bandwidth, it is evident that many jobs that were done in industrialised nations, but did not really need face to face interaction, can be shipped out to poorer countries, which have cheap labour, an educated workforce and computer literacy. General Electric was one of the pioneers that realised the potential in this.
In an interesting paper on BPO, Rafiq Dossani of Stanford University and Martin Kenney of the University of California report how GE achieved an annual saving of $340 million from the shifting of some of its back office work to India.
According to their calculation, when all costs are taken into account, a call centre in Kansas City works out to over three times as costly as a call centre in Mumbai.
Not surprisingly, India has seen a steady rise in employment in the IT-enabled offshore services sector.
In March 2002 the employment in this sector was 106,000; a year later this had climbed to 171,500; and according to latest projections, this will cross the 1 million mark by the year 2008.
Over the last few years Motorola has been laying off workers in the US and moving operations to Brazil, China and its plant in Chihuahua in Mexico.
India has been a major and growing outsourcing location for Microsoft, Hewlett Packard, British Airways and other major corporations.
While India and several other poor nations look to these facts and trends with hope, many industrialised countries view them with anxiety and even anger.
As one of the persons, who spoke to me in Helsinki said despondently, he thought poorly of globalisation ever since some of his friends lost their jobs through no fault of theirs but because Ericsson decided to shut down some of its European plants and move operations to China.
There are economists who would dismiss such concerns out of hand as Northern protectionism. But that will be wrong.
First, the people being hit by this are not the Northern rich but, generally, poor workers. Moreover, protectionism or not, these are matters of great emotional significance and, if not dealt with, can engulf politics and policy.
If you read some of the Web sites of the Ku Klux Klan (not that I am recommending you do), you will see that economics now vies for space with their other more traditional, shall-we-say race-related concerns. They point out how jobs are being lost to developing nations and they therefore oppose globalisation.
There are three counterpoints that we have to make in the face of such opposition.
First, all this has nothing to do with the international labour standards problem, which deals with the poorest workers of poor nations and child labourers. The unskilled labourers of poor nations do the kind of work that virtually no one in a developed country would do.
So with the poorest workers of developing nations there is no real conflict of interest because they do not tread common grounds.
Second, and this is testimony to the power of propaganda, that in the popular perception BPO is viewed as a labour-versus-labour problem, that is, a conflict of interest between workers in rich and poor nations.
When a corporation outsources operations to a developing country, some of its incumbent workers lose out (at least in the short-run), true.
But there are many groups who gain. Workers (software technicians and call-centre operators) in the host country gain of course, but so do the shareholders and owners of the company (whose profits rise) and consumers (who face lower prices).
So it is not labour versus labour alone.
There are many others who gain and so there are many others who can compensate the loser. To that extent, a large part of the responsibility lies with the developed country to provide relocation benefits and social welfare.
Finally, a point that is widely misunderstood by the lay public. If, through such offshore work, and greater trade and capital flows, India, China, Brazil and South Africa become better off, their demand for goods and services will grow.
This will inevitably mean a greater demand from them for goods from other countries and, going by what evidence we have, a dominant part of this will be from rich countries.
This will in turn create jobs in rich countries. The jobs will of course not be in the sectors that moved to developing countries but in other sectors.
Some standard economic calculation shows that the new jobs created will typically be more in number than the ones lost.
Hence, when all the intricate consequences that emanate from the fact of BPO are taken into account, we will find that this creates more jobs than kills.
But since the loss of jobs occur in concentrated, visible sectors, it is easy to take that as the net effect of BPO, and it is also easy to lobby those interests against BPO.
But to do so would be to harm the cause of workers in general in developed nations, not help them.
All this is not to deny that workers in industrialised countries may be getting relatively impoverished over time.
I believe that there are forces at work that tend to make the total income that accrues to labour relatively small compared to the income that accrues to capital. (The way to counter this is to give workers an increasing stake in the earnings from capital, but that is another subject deserving its own analysis.)
But this has nothing to do with the movement of back office work to poor nations.
The fact remains that if the latter were to be stopped, workers as a whole, in industrialised nations, would be worse off than they would be in the absence of back office outsourcing.
The writer is professor of economics and director of the Programme on Comparative Economic Development at Cornell University.
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