British PM’s stand on outsourcing

‘Open doors to India’, says British PM David Cameron

In July 2010, India was one of the first international destinations that the newly elected British Prime Minister David Cameron chose to visit. The British PM came to India with a simple agenda – create greater access to the Indian market for British companies since this would lead to job creation back home in the UK.

When interviewed by Sky News in India, David Cameron stated,

“One of the things we want to see is an opening up of the banking, insurance and retail industry that are relatively still protected and which would benefit British business. Basically, open doors in India so our businesses can invest.” The interview demonstrated exactly why Britain and other Western economies should not fear outsourcing, should not perceive it as a cause behind loss of jobs and, most importantly, should not implement protectionist policies. In the merry-go-round that is globalization, businesses and trade get uprooted and move to where economic activity is most financially viable. Inevitably, therefore, job shipping is a part of globalization and should be accepted as such. In turn, globalization brings with it fresh opportunity, increased revenue, and greater job creation. This is precisely why the British PM has sought enhanced economic cooperation with India and greater access to the Indian market. The more liberalized the Indian market is the more British companies can invest in India and, in turn, expand and create more jobs back home.

The British PM’s statement also served as a poignant reminder of the fact that protectionism will inevitably be met with protectionism. Though the Indian market has been significantly liberalized since the early 1990s, the West is keen to witness greater access to the Indian market. The likelihood of this being achieved seems far-fetched if the British government were to implement protectionist policies against shipping of jobs to offshore locations. Rather the converse would be true, as protectionism against job shipping would result in the implementation of India’s own protectionist measures. With the massive potential the Indian market now presents to the West, protectionism would, undoubtedly, not be in the best interests of the British economy.

Advocates of protectionism against sending work to be done in another country or those who criticize the practice of job shipping must take into consideration the entire dynamics of globalization before petitioning for a curb on outsourcing. True, job shipping results in a ‘temporal’ displacement of jobs, but the increased level of economic activity via the removal of trade barriers creates that many more jobs in the West. The West should focus on greater access to the Indian market rather than aiming to curb outsourcing. It is access to India’s 350-million-strong middle class that will contribute to economic gains and job creation back home. Protectionist measures serve only as a fallacy; giving the impression that jobs are ‘saved’. In truth, a greater number of jobs that would have been created through investment and exportation never materialize.