Dobbs, Vashistha, Offshore, Outsourcing, Jobs

neoIT CEO makes the offshore outsourcing case on CNN

neoIT CEO, Atul Vashistha last night was on CNN's Lou Dobbs Moneyline show making the case for offshore outsourcing to the American people. Read further for the interview transcripts.

The SBPOA share his views and concerns about 'knee-jerk' reactions and short-term political intervention aimed at restricting offshore outsourcing. Whether it impacts the US or, as it does increasingly, Europe, far-sighted business leaders and politicians recognise the ultimate positive impact of offshore BPO on the competitiveness of developed economies. We at the SBPOA do not underestimate the evident human impact of job losses, but we understand that such dislocation is one of the less desirable effects of creating sustainable economic growth.

At the SBPOA we are working to ensure that our independent perspectives on offshoring and BPO reach all interested parties and that ultimately opinion leaders and legislators are appropriately informed and support the efforts of our 6,500 members worldwide, who are engaged in the shared services and BPO sector.Whether it impacts the US or, as it does increasingly, Europe, far-sighted business leaders and politicians recognise the ultimate positive impact of offshore BPO on the competitiveness of developed economies. We at the SBPOA do not underestimate the evident human impact of job losses, but we understand that such dislocation is one of the less desirable effects of creating sustainable economic growth.

Interview transcripts aired 5th February, 2004 18:00ET source CNN

DOBBS: Bill, thank you very much, Bill Tucker.

Well my next guest here hosted a conference last month to help American companies shift those jobs overseas. It was a seminar to teach American corporate executives how to ship those jobs overseas. He says globalization will ultimately help us all. That offshore outsourcing is not to blame for the loss of jobs in this country. Now joined by Atul Vashistha. He says it's a misconception. And welcome.

And how is it a misconception?

ATUL VASHISTHA, CEO & FOUNDER NEOIT: Thanks, Lou.

It's a misconception because if you look at what offshore outsourcing is doing for America it is actually helping American companies stay competitive. It is helping them lower the cost of products and services. And actually it is improving the buying power in nation.

DOBBS: How does it -- I think I understand, if you will, the premise of what you are saying. But when we watch and as we document here, literally hundreds of thousands of jobs being shipped to cheap overseas labor markets, those jobs are replaced typically by salaries that are 30 percent lower and there is no migration up the value chain, it's down the value chain. So, how does that help America?

VASHISTHA: There's no denying that, in the short term we have a problem. I think the industry, the government and the companies are still not doing enough. What I can tell you is that our clients are starting to do things to combat that.

DOBBS: Like what?

VASHISTHA: For example, some of the things our clients are doing, they are actually putting money into retraining. We cannot be competitive in this new global economy if our workers don't continue to update their skills, even if your are a software programmer.

DOBBS: Let me ask you this, engineering, software programming, have unemployment rates, approaching double digits in this country. What in the world are you going to train them for?

VASHISTHA: Lou, technology as you know is changing every year.

DOBBS: I do, indeed.

VASHISTHA: If four years ago you were doing HTML, or Web based programming, you need to do a lot of different things today, because that technology is old now.

DOBBS: Right.

VASHISTHA: I did my engineering degree and my MBA, I went back to Harvard last year to educate myself again. And I think that's something we absolutely have to do.

DOBBS: That's boffo (ph). But let's talk about those hundreds of thousands of jobs -- people glibly talk about training. Men and women who have trained themselves in a variety of skills who have a variety of educational pursuits and degrees, I hear people start talking about training as if that's a panacea.

What jobs should they train themselves for? We are shipping high value jobs overseas to India, to the Phillipines, to Ireland, to Poland, to Russia, for crying out loud. What in the world are we supposed to train them to do?

Now, I understand the profit motive, as a matter of fact, no one is more pro business, pro American free enterprise than I am, but I'm also pro American worker. What in the world -- you talk about pain (ph), we're seeing evidence of it every day.

VASHISTHA: But Lou, if we don't focus on our investment on training we can't just put up our borders and imagine that these job will stay. In fact, companies are going bankrupt because they are not taking advantage of these lower co-markets.

DOBBS: Because somebody else is, is that right?

VASHISTHA: Right, exactly. So there's...

DOBBS: So what you end up is, a race to the bottom as it's been styled. Because if one company is go over to India to get a job, to pay a salary that is a tenth of what they would be paying in this country. They are forced to compete. Is not free trade. This is not comparative advantage, as envisioned by David Ricardo, this is the wholesale exportation of American wealth.

VASHISTHA: Lou, the difference here is that this is a global economy.

DOBBS: I understand that. But these are old saws (ph) -- globalization has been a fact since 1987.

VASHISTHA: Right, Lou, take a look at what happened to the buying power in our country. It's significantly gone up. And I know in the last 2 years, 3 years...

DOBBS: Consumption power in this country for the last three decades have declined over the past three years has actually fallen even more dramatically than that average over three decade. It is quite the inverse.

VASHISTHA: Lou, you know, I'm sorry, I beg to differ.

DOBBS: Please.

VASHISTHA: If you take a look at the buying power of our country. Let's take a look at the last two decades. We created 22 million excess jobs than we're destroyed (ph) in this country. This is a Bureau of Labor Statistic numbers for the last two decades.

DOBBS: We created 22 million jobs during the course of the Clinton administration, 1992 to 2000.

VASHISTHA: Right. So we created surplus jobs. I'm talking about economy changed, we actually created more jobs than we lost. At the same time the buying power in this country...

DOBBS: What sort of evident 22 million jobs.

VASHISTHA: Right -- just so what is happening today is I think this is the next evolution in the global economy.

DOBBS: That's wonderful. Great evolution, if you believe that the United States should be shipping its wealth, its jobs, standard of living and quality of life to third world countries where there are no regulations for environment, no regulations for labor, no standards that is a requirement here in this country.

The logical extrapolation it seems to me, Atul, is that if we are going to compete fairly, with fair trade and a globalized market, it seems to me that India, the Phillipines, Mexico, a Central American nation should have the same standards, otherwise we're competing simply on the price of labor.

VASHISTHA: Lou, I absolutely agree with you. In fact, if you look at the service industry which we participate in, these companies are paying higher average wages than the local counterparts. I mean so if you look at what is happening in India or China.

DOBBS: You're saying American companies are page higher wages in other countries than native companies.

VASHISTHA: American companies and the local companies that participate in this business. So companies like Infosys or Whipper (ph), or all these companies in India they are paying better wages than the average people get in that country.

DOBBS: The average Indian company.

VASHISTHA: Absolutely.

DOBBS: But why in the world do ten million Americans who are unemployed in this country, give a damn?

VASHISTHA: Well, Lou, here's why they give a damn, because if we don't do this, it we don't continue to innovate and let our companies be successful, we will lose more jobs.

DOBBS: Wait a minute. You are not innovating. You are not being more efficient. You are talking about hiring cheaper labor. Those are only code words for cheap labor. McKenzie did a study, as you're aware of, in what is the bulk of the gain for American companies?

VASHISTHA: Well, it's...

DOBBS: All in labor savings.

VASHISTHA: A bulk.

DOBBS: The bulk, as in 70 percent of it.

VASHISTHA: Right. Lou, what happens to the money that comes back?

DOBBS: What money?

VASHISTHA: The money that is being repatriated back to this country? The savings that happen.

DOBBS: We should ship all our jobs then, because it sounds like a highly profitable enterprise.

VASHISTHA: Lou, it's easy to take a look at this...

(LAUGHTER)

DOBBS: Atul, I understand your position. I understand the profit motive, but corporations have a stake in this country do they not?

VASHISHTHA: I absolutely agree.

DOBBS: And they have a stake in the community, in investing in their people. They have a responsibility, because they are the beneficiary of this national American economy.

VASHISTHA: Lou, I absolutely agree with you. In fact, one of the things that has not happened yet is the industry, the associations and the companies have not come together to address the displaced workers. Now I can tell you, like I was telling you before, some of our companies are doing that. Apart from training...

DOBBS: That's a wonderful paternal outlook. But what I would much prefer to hear business people, men and women in this country running corporation and folks like you trying to make a dollar, you have a responsibility to this national economy. This is not just a market place. It's a nation. Right?

VASHISTHA: Absolutely.

DOBBS: I would love to have you come back and talk some more, we're out of time. Will you come back? We'll have more discussion.

VASHISTHA: Absolutely, Lou. Thank you.

DOBBS: Atul, thank you very much.