A Tale of Two Cities

Forbes magazine compares the stories of a dozen Americans laid off in Silicon Valley because of offshoring to those of their Indian counterparts who gained some of those jobs in Bangalore, India's offshoring hotspot. Before losing their jobs, American workers in the technology industry were going about their usual business –taking home plump checks, closing on a condo, and generally enjoying the trappings of a “yuppie” lifestyle. Suddenly, however, they found themselves laid-off and readily replaced by contract workers in India. Paychecks plummeted, some moved back in with their parents, one took up a job as a truck driver. Meanwhile, in India salaries for “techies” have quadrupled or quintupled, affording young software programmers and web developers a comfortable upper middle-class lifestyle. Some only recently out of college are able to pay for homes, automobiles, and holidays. Some observers argue that outsourcing is “an unintended consequence of globalization” that, contrary to US politicians’ alarming speeches about unemployment, benefits the US economy in the long run. For every dollar spent on offshoring, the US gets back $ 1.12, says a report from McKinsey consultants. The authors of this article argue that this is possible because “as more workers in India land higher-paying jobs, they can afford to buy more U.S. products, from processor chips to Hollywood films.” However, India should watch its back, warn the authors. With neighboring China eyeing the global outsourcing market, cold-hearted economic competition might strike India next. – YaleGlobal