The Indian Outsourcing Issue Is BackDavid J. Karl
President Obama’s campaign is running a new television ad in key swing states alleging, among other things, that Republican Mitt Romney “outsourced state jobs to a call center in India” while he was governor of Massachusetts. In a report on the $25 million deluge of negative ads the campaign has begun to unleash, the New York Times describes the campaign’s media chief as focused on making “you think of call centers in India every time you hear Mr. Romney’s name.”
Given the political resonance of the outsourcing issue, especially among important Democratic Party constituencies, the charge is not unexpected. But it is disheartening nonetheless since the president himself has argued for a more sophisticated understanding of the bilateral economic partnership. The specific accusation against Romney, which has been rebutted by the Washington Post, should come as no surprise given the Democrats’ track record of using the perceived ill-effects of India’s economic rise to score political points. There was, for example, a notable upsurge in opposition to the outsourcing of work to India during the 2004 presidential campaign, when John Kerry called business leaders engaged in the practice “Benedict Arnold CEOs.”
During the 2010 election cycle, then-Senator Blanche Lincoln of Arkansas accused her Democratic primary opponent of profiting from a technology company that supposedly outsourced American jobs to India. Senator Barbara Boxer of California leveled a similar charge against Carly Fiorina, her Republican opponent and former Hewlett-Packard chief executive. In the same year, Ted Strickland, the Democratic governor of Ohio who was up for reelection, signed an executive order prohibiting state agencies from contracting with vendors that outsource government services, and Senator Charles Schumer of New York was championing legislation imposing a surcharge on customer service calls that U.S. companies relay to foreign call centers. He claimed that the bill would keep thousands of existing jobs in the U.S. and provide an incentive for previously outsourced jobs to return to the country.
That bill languished in Congress, but Schumer was more successful in shepherding through the 2010 Emergency Border Security Supplemental Appropriations Act, which funded increased deployment of security resources along the border with Mexico by sharply raising application fees for H1-B and L-1 temporary visas for skilled foreign workers. The law was written in such a way so as to fall squarely on Indian technology-outsourcing companies that send thousands of workers to the U.S. each year—a burden that Schumer and Senator Claire McCaskill, a Missouri Democrat and co-sponsor of the legislation, were not shy in emphasizing.
The Indian government has complained vocally about the law’s discriminatory impact as well as a marked increase in rejected visa applications for Indian technology workers. The government of Prime Minister Manmohan Singh may file a complaint with the World Trade Organization over the issue. Although Washington pledges to work through these concerns in a cooperative manner, the odds are not good, as a Bloomberg Businessweek article noted last week, that New Delhi will receive much satisfaction.
The new Obama ad has a long political pedigree, though it is still dismaying given how the president argued for exorcising zero-sum thinking in bilateral affairs during his visit to India in November 2010. Then the White House took pains to portray India as an economic opportunity too golden to pass up; indeed, the main purpose of his visit seemed to be securing as many commercial deals for U.S. companies as possible.
While in Mumbai, he told a gathering of U.S. and Indian business leaders that “in our interconnected world, increased commerce between the United States and India can be and will be a win-win proposition for both nations.” He went on to emphasize the necessity of dispelling “old stereotypes” about India being “a land of call centers and back offices that cost American jobs” or bilateral ties being “a one-way street of American jobs and companies moving to India.” Elsewhere during the trip, Obama cautioned that “… we should not be resorting to protectionist measures. We should not be thinking that it’s just a one-way street. I want both the citizens of the U.S. and India to understand the ties between the two countries.”
Cynics may dismiss the inconsistency between Obama’s words then and his current campaign rhetoric as the usual electoral palaver. There is a real cost involved, however, beyond that of creating another needless irritant in bilateral relations. It also undermines other parts of the president’s economic agenda in which India plays an important role. Recall, for example, the 2011 State of the Union address, in which the president acknowledged that continued U.S. prosperity—“winning the future” as he called it—requires greater access to the global reservoir of skilled professionals. India is a major contributor to the global talent pool, a fact reflected in a bipartisan bill now working its way through Congress that would allow more skilled immigrants from India and China to become legal permanent residents.
Yet it’s hard to make the political case that U.S. companies should be free to benefit from one aspect of an increasingly globalized economy when your campaign rhetoric argues they should be constrained in another. Whatever the White House’s electoral calculations may be, this contradiction damages Obama’s vision for bilateral affairs.