India and the United States

India and the United States

SOC 325 DR. Elaine, Bontempi November 15, 2008

India and the United States

Abstract India will become the most populous nation by 2030. Thanks to the fast growing software and IT revolution, India is changing its role around the world as formable economic competitor. Despite these achievements, it should be noted that employment growth in the Indian services sector has been quite modest, underscoring the importance of achieving rapid industrial and agricultural growth. Poverty and the threat of HIV/AIDS are threatening India at a very alarming rate. In contrast, the United States houses about 4.6 percent of the world’s population, which was estimated to be nearly 6.5 billion at the end of 2005. United States is the world’s third most populous country, trailing China (1.31 billion) and India (1.08 billion). The transformation of the global economy in the last decade, fostered by the spread of the Internet and other information technologies, has significantly changed this equation for the United States, instead of leading the world in information technology we find our self playing catch up with India.

India and the United States

India will become the most populous nation by 2030, its middle classes, already numbering 200 million people, are growing thanks to some extent to a booming software and IT sector. Revolution India’s reputation is also undergoing an important change. Past stereotypes of poverty and backwardness are being displaced by new images. Some of these, including the belief that Indians are inherently computer-savvy, are also stereotypes, but on the whole a more balanced and accurate picture of India’s assets and liabilities is emerging, and India is being courted by the major powers of the world. Enabled Services, including call centers, design, and business process outsourcing services. Growth in services, however, has been much more broadly based than growth in information technology in the 1990s. Growth was the strongest in business services, telecommunications, financial, community services, hotels and restaurants. Tremendous scope exists for future rapid growth in the Indian service economy, provided that deregulation of the services sector continues. Despite these achievements, it should be noted that employment growth in the Indian services sector has been quite modest, underscoring the importance of achieving rapid industrial and agricultural growth. By global measures, India’s economy is still relatively small with 17 percent of the world’s people, India accounts for less than 2 percent of global GDP and 1 percent India and the United States

of world trade. Even though growth has been noteworthy and India has improved its performance on the Human Development Index (HDI) moving from 132nd place in 1997 to 127th in 200. The country is facing many new challenges. The new threat of HIV/AIDS is spreading quickly, approximately 4.58 million Indians are currently infected with HIV and 600,000 have the disease. Unemployment, although still low by international standards, 4.4 percent, compared with 9 percent in Brazil and 3 percent in China, which is steadily increasing in rural areas. Progress has also been uneven across different regions of the country. Evidence of divergence in per capita incomes exists across states; richer states are increasing incomes faster than poorer ones. As a result, poverty is present in the rapidly growing cities as well as the vast rural areas, but increasingly concentrated in the country’s more slowly growing states. Hundreds of millions remain in devastating poverty. India and Pakistan the U. S. economy runs a large negative trade balance with the rest of the world through its imports of vast quantities of raw materials and manufactured goods. It also is the world's leading destination for international migration; over 1 million people a year immigrate to the United States. Global economic factors have had their effects on India as well; its industries are becoming more open to the world market after decades of strong protection. India and the United States

Although immigration flows have only a small effect on India's overall population trends, capital flows and remittances from Indians abroad are playing an increasingly important role in the economy. Discrimination has played a big toll on employment in India. Childbearing and rearing has played big part on the ability for women and men to find work. Women described discrimination when they were pregnant and when employers knew they were raising children. Men were faced with the same dilemma when they were involved in their children care. For men, the discrimination more often began when they lost a job because they stayed home to provide essential care for a family member. For women, the discrimination arose as soon as employers anticipated they would be rearing children as well as working. This can be a challenge for families in India, because there are no laws to protect them from discrimination, from employers and hiring practices as the country advance into the 21st century. Pregnancy is often perceived by management as a disruptive event in the workplace and, as a consequence, women who announce their pregnancies often find they are less than welcome to continue in their positions. It is not uncommon for a woman returning to work after childbirth to find her job materially altered or even eliminated. The law requires employers to apply its policies relating to leave, seniority, compensation, and India and the United States

benefits to pregnant workers on the same terms as to workers with temporary disabilities. An employer who treats a pregnant worker less favorably than a similarly situated non-pregnant worker is guilty of sex discrimination. The law is clear, but employer compliance with the law remains less than complete.

In contrast, the United States houses about 4.6 percent of the world’s population, which was estimated to be nearly 6.5 billion at the end of 2005. This makes the United States the world’s third most populous country, trailing China (1.31 billion) and India (1.08 billion). The greater use of information technologies and of innovative human resource practices have resulted in continuous changes in the skills that firms want in workers. As recently as 30 years ago, the typical manufacturing job was one of largely manual labor, with little problem-solving discretion on the job. While there certainly are jobs in the United States that continue to be relatively unskilled, or that have de-skilled as a result of changes over time (such as cashier checkout jobs), many jobs have increased their skill demands. A key factor in the strong economic performance of the United States over the last 50 years has been access to a larger supply of highly skilled workers than its main economic rivals. For nearly four decades the United States has been engaged in creating workplace equality for persons of difference races and ethnicities and it’s India and the United States

achieved some success in that regard at the same time, we have been engaged in creating a workplace that will take full advantage of and fairly compensate women and men for their hard work and service to the country. The United States continues to enjoy a number of educational advantages for the knowledge economy. It is home to the worlds most vibrant and diverse higher education sector, including more than a third of the world’s colleges and universities, and a very high percentage of the world’s top-ranked research. Starting with the GI Bill following World War II the United States was the first nation to create a mass higher education system. The relative economic advantage generated by this high-skilled labor supply began to increase dramatically during the 1990s, technological change and globalization brought about a shift toward a more knowledge-based economy, and a growth in the demand for college graduates and higher salaries for those with bachelors’ or advanced degrees .While the need for a highly educated workforce has continued to grow, a number of trends appear to be undermining the educational advantage that the United States has had for so long. A relative deficit in the production of basic skills for the majority of the workforce; a loss of the country’s lead in the supply of college graduates, as other nations have substantially expanded their higher education systems. A decline, following 9/11, in the supply of highly educated India and the United States

immigrant students coming to, and remaining in the United States to work; reduced incentives for employers to invest in developing the skills of their workforce. The transformation of the global economy in the last decade, fostered by the spread of the Internet and other information technologies, has significantly changed this equation. Off shoring of work has been occurring for centuries and is part of the wider system of international trade; what is new is the geographic mobility of the most highly skilled work. The ease with which firms can now move information instantaneously, and nearly without cost, around the world has meant that many segments of knowledge work call centers, accounting, web design, claims processing, medical diagnosis such as; reading a CAT-scan or X-ray can be relocated to wherever a supply of labor with suitable skills can be found at the best price. India, with a population now exceeding one billion and an education system that has produced millions of English-speaking graduates who are particularly strong in computer programming, engineering, and other technical areas, is a leading source of offshore human resources. India has attracted many top U.S. high-technology companies, including IBM, General Electric, and Hewlett Packard, among others, to set up operations in Bangalore and Hyderabad and to take advantage of the available high quality, but relatively low cost, workforce. Call center operators, paid an India and the United States

average of $10 per hour in the United States, earn an average of $1.50 per hour in India. Similar salary differences of 10:1 ratio are found in many technical and service occupations. With this supply of high-quality, low-cost workers, India’s firms such as Infosys and Wipro are leading the way in the provision of comprehensive outsourcing services for multinational corporations. But lower labor costs are not the only attraction. Many corporations are organizing virtual teams that take advantage of the time difference between the United States, India, and Europe to offer round the clock technical support, and to expedite new product development. With the IT infrastructure in place, the pressures of global competition served to accelerate the off shoring trend. India has more than 850,000 people working in IT and business services, with roughly three-quarters of those jobs originating from U.S. firms. Experts estimate that the United States, Europe, and Japan will continue to shift 600,000 jobs per year to lower-wage nations over the next decade, with as many as ten million U.S. jobs, many occupied by college graduates are under threat. As the growth of high-tech work continues to attract many emigrant Indian technical experts and investors back home from the United States, it appears likely that India will continue to move rapidly up the value-chain, creating its own companies that will be generating new innovations in products and services. India and the United States

At the same time, many other countries Malaysia, the Philippines, China, and Hungary are entering the off shoring business, providing alternative low cost suppliers to U.S. firms. The off shoring trend is well illustrated by the experience of IBM. In May 2005, IBM announced the laying off of some 10,000 employees in Europe and the United States as part of its ongoing global restructuring efforts. Meanwhile, it continues the rapid growth of its Indian operations, which already include over 20,000 employees performing a wide variety of programming, consulting, and back-office functions. But it is not just companies who are embracing off shoring; state and local governments, which might be expected to resist the movement of jobs away from their voter and taxpayer base, have begun to move work offshore because of budget pressures. On top of that, highly skilled, educated labor is far cheaper in many developing countries than it is in the United States. The savings in labor costs can be as high as a factor of 90 percent, though when one counts the additional burdens of management and coordination across thousands of miles, the net advantage is probably closer to 30 percent. For example, outsourcers charge $30 an hour for the services of a programmer in India, whereas they charge $120 for a programmer in the Midwest. That results in a savings of 75 percent, but does not include the extra burdens placed India and the United States

in communicating his needs to the programmer in India, which when accounted for would reduce the net savings to 30 percent. That’s why companies enjoy such success with outsourcing jobs overseas because they hide from the United States tax codes and pay employees ¼ of what they would pay an employee in the United States.

Reference

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Yasheng,Huang,(2008,July/August).Foreign,Policy: The next Asian Miracle: 33-40.

Three studies (Audrey Singer; Susan Hardwick; Caroline Brettell 2008April) Twenty first Century Gateways: Immigrant Incorporation in Suburban American. Brookings Institution Press http://www.migrationinformation.org/Feature/display.cfm?id=680 GROWING POPULATIONS, CHANGING LANDSCAPES Studies from India, China, and the United States. Indian National Science Academy. Washington, DC, USA: National Academies Press, 2001. 26-40

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