Today in Tech: Bring Jobs Home Act, New Turfs, and Windows 8 Pricing

NS Ramnath
Updated: Oct 1, 2012 01:33:10 AM UTC

Outsourcing debate: three things to remember Half way through an Obama campaign video, there is a visual of an empty office space, large bare windows, and discarded cables heaped at the centre of the floor. The image shifts to another upbeat scene to India, to a call centre focusing on four or five young people talking over phone.

The voice-over says, "Instead of hiring workers from his own state, Romney outsourced call centre jobs to India." The ad concludes: "When Romney talks about what he will do as president (The background has Romney saying: I know what it takes to create jobs), remember, we have heard it all before."

[youtube]http://www.youtube.com/watch?v=oWdZEJW1vWY[/youtube]

 

It was clear for sometime now that one of the key themes of Obama campaign was going to be job creation. US is still battling a high umemployment rate, and the underlying message of Obama's campaign is that the Republicans will outsource your job, while Democrats will try to protect it.

ET today has a story on a key weapon in Obama's arsenal: Bring Jobs Home Act, a legislation that's up for discussion in the senate this week, and the impact it's likely to have on Indian IT services companies. (The bill promises companies a 20% tax credit for costs associated with bringing jobs back to United States and to end tax deduction for those outsourcing jobs.)

We need to remember three things about it.

One. Yes, we have heard it all before. Like a clockwork, the debate on outsourcing heats up every four years ahead of the presidential elections in the US. During these debates, politicians often exaggerate the impact of outsourcing/globalisation and their ability/willingness to curb them. An American newspaper recently quoted  Dr. Lawrence Spizman, who teaches at State University of New York at Oswego  as saying "Usually tax credits don’t work out as we anticipate. All this is, is political jockeying now. So these bills are political bills." Economists have long argued that the benefits and costs of both technology and globalization are very similar, and are often inter related. Politicians understand this which is why their actions don't keep pace with their rhetoric.

Two, the bigger problem for US is in manufacturing, rather than IT services. As Som Mittal, Nasscom's president pointed out to The Hindu yesterday: "Even President Obama, while he talks about call centres on and off, is concentrating more on getting manufacturing jobs back in the fields of retail, construction, government, etc. Not the tech-industry. The unemployment rate is the highest in those areas, not the tech-space." I don't know how easy creating manufacturing jobs is going to be, but a report in Reuters - about Google deciding to manufacture its home entertainment device in Silicon Valley to get to the market fast - suggests one way forward.

Finally, Indian companies are getting better at global delivery model - a blend of on-site, (work done in customer locations), near-shore (outside the clients offices but often within the same country) and off-shore (not only at its delivery centre in India, but also in other places best suited for a specific type of work). Business Standard today has a story  on how Philippines used the expertise of Indian IT/BPO companies to build its own call centre industry. There has been any number of reports on IT companies hiring in developing world. All these imply that companies will have to face a higher level of complexity, and  discard their earlier assumptions of cost, but it also implies that demand is not going to vanish.

The difficulty of getting into other people's turf
The news reports on Microsoft writing off 6.2 billion dollars related to the acquisition of aQuantive in 2007 is yet another indicator of how difficult it is to make big inroads into areas dominated by new and niftier players. Microsoft bought the company to compete better with Google, but it couldn't. It's search engine Bing, even while gaining users, is nowhere close to Google. Google itself has fared no better in trying to compete in social networking space against Facebook.

We cannot compare these moves and the initiatives of IT Services companies to get into new areas like cloud, mobility and big data. For one, there is no dominant model yet, and everyone seems to be experimenting. Yet, at another level, these failures also show that the road IT companies are taking is fraught with risks. How they navigate will definitely be worth tracking.

Windows 8 Upgrade
If you have Windows 7, Vista or XP, you can upgrade it to Windows 8, for $39.99, and you can add Windows Media Centre for free, according to Windows 8 official blog.  Microsoft upgrades used to cost around $50, and this announcement - indicating a different pricing strategy - comes days after its its announcement of tablets, which will also run Windows 8. It's clear that Microsoft is looking at an integrated strategy - building on its strength, its vast user base. (According to another report, Windows 7 has about 50% share in the OS market. Also, check out this piece on how it will play out for Windows, Google and Apple.)

Also of interest
Amazon buys map startup UpNext - report: Reuters
Facebook Explains Email Snafus, Promises Bug Fix: AllThingsD
Big Tech: New Patent Office Fighting Tech Giants for Talent: Wired 
God goes digital: UK hotel replaces Bibles with Kindles: Digital Trends

 

The thoughts and opinions shared here are of the author.

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