India's Investment in U.S.: Not Exactly a Win/Win

Ann All

Back in March, I wrote about the expansion activities of Indian service providers like Wipro and Tata Consultancy Services, which are building facilities and hiring local employees in the U.S. and Europe. Wipro has two development centers in the U.S. and a single center in the UK, with another on the way. TCS earlier this year opened a $13 million U.S. headquarters in Cincinnati.


In an earlier post on Wipro's facility near Atlanta, I noted the Georgia Department of Economic Development's intent to open a trade office in India by 2009, the better to schmooze Indian services providers that might be lured to the U.S. by a weak dollar/strong rupee combination and a desire to enhance their business offering with more U.S.-specific business expertise.


It looks like this is a trend with real staying power, based on a Hindu Business Line India story relating some of the U.S. investments made by Indian companies. It mentions, for instance, that TCS has pumped $3 billion into the U.S. economy. (It's worth noting that the company received some generous incentives from the state of Ohio, including an eight-year, job-creation tax credit worth some $15 million and a $2.5 million grant to help pay planned building renovations.)


According to the story, Indian entities now employ about 30,000 workers in the U.S. Oddly, the number appears to be far larger, based on the figures mentioned in later paragraphs. The story lists Wipro with 19,000 employees, Essar with 7,200, Wipro with 8,000, Satyam with 5,000, HCL Technologies with 3,000, Ranbaxy with 600, Wockhardt with 200, and Mahindra USA with 125. My arithmetic skills are admittedly poor, but that adds up to 43,125, by my calculations.


The article notes that fewer than 30 of Essar's employees in the U.S. are Indian nationals as if this is an unusual fact. Thus, my assumption (and I am open to correction if it's inaccurate) is that 30,000 workers are U.S. citizens, while more than 13,000 are Indian nationals.


The story presents a snippet of a report by the US India Business Council (USIBC) and FICCI (Federation of Indian Chambers of Commerce and Industry):

Indian employers and their American workers contribute billions of dollars to federal, state and local coffers by way of wages, corporate taxes, payroll taxes and income taxes. The ripple effects of these jobs and investments stimulate and enrich local economies nationwide.

While this is true, these kinds of investments won't benefit the economy the way that home-grown investments would and ultimately could further slow U.S. business activity. Here's a quote from an Economic Policy Institute experted interviewed by the Atlanta Journal-Constitution about Wipro's stake in that city:

There's no doubt some jobs will be created, but who are they putting out of business with the products they're selling to the U.S. business community? For the first time we're seeing the process of in-sourcing eliminating domestic jobs.

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Jul 12, 2008 2:30 PM Just a Comment Just a Comment  says:
I'm a US citizen working for an Indian IT company. I wanted to comment on the 'Economic Policy Institute' expert's quote that '... the process of in-sourcing eliminates domestic jobs'. This was the same argument that US auto makers had when Asian manufacturers began opening plants in the states. Domestic economic protectionism cannot serve as the impetus for progress and higher efficiencies. Globally companies are finding their IT departments as cost centers that can no longer be swallowed. What is the difference between a manufacturer using machines to create more with less manpower, than a company using a 'contractor' to deliver the same efficiencies? If a company decides to outsource its IT functions by 40% is it not better that we capture some of that 40% domestically. Granted not as many jobs remain, but the net loss is smaller. Reply
Jul 13, 2008 7:21 PM Test test Test test  says:
I disagree with the above post. And I also have worked for Indian IT companies, and have found them to be decent employers of Americans--although they discriminate against their own people.THAT SAID, much of the inefficiencies observed in the IT market is caused by an oversupply of domestic programmers. Programmers (including foreing programmers) aren't stupid; they respond to laws like H-1B by creating make-work that will absorb the excess supply.Furthermore, many immigrant managers see programming as a means to immigration rather than the other way around. This creates a situation in which questions like "can I put 3 people on this project--or better yet, 4?" are asked.The end consumer of software, ultimately isn't programmers. It follows then, that the best way to create programming jobs isn't to bring in programmers.The best way to create programming jobs is to bring in other workers. Factory workers create a demand for ERP software; lawyers create a demand for legal support software; truck drivers create a demand for logistics applications; retail clerks create a demand for point-of-sale systems.Our current philosophy that the way to have a high-tech economy is to have an economy that consists of 100% programmers is faulty thinking. If the entire economy consisted of 100% programmers, they'd keep each other busy with design specifications, bug fixes, and test plans. There'd be no shortage of work--but nothing would get done.The simple truth is we have too many programmers in the US, not too few. Bringing in more will lower wages, but it won't lower IT budgets. That's because for many in the IT industry, the motto is "do less with more."A guy coming here from 3,000 miles away who must be classified as a programmer to immigrate isn't going to let a minor detail like an unproductive project get in the way of his plans. Nor should he.We're getting what we deserve. Fix the law; don't bring in 100% programmers. The consumers of software products need to get into the US as well. Reply
Jun 28, 2010 2:29 PM Vinanti Sarkar Castellarin Vinanti Sarkar Castellarin  says:

After three decades multimedia living in America ... we are publishing an exclusive "blue" book titled:  "INDIA INVESTS IN THE USA 2011" showing the heart and soul of India's multinationals and Indian Americans working in the USA during the 2010 U.S. financial recession, having been in the country for over five years.

It lists brief backgrounds on the major multinational companies across the USA ... offering millions of Americans employment during the hardships of layoffs and unemployment.

The objective is to show mainstream America that India is no longer a Third World country ... and her businessmen are facing the challenges to revive the US economy by bringing in largest investments, instead of declaring bankruptcy.  It has a gold mine of success stories ... For more information contact: vsarkar1@earthlink.net


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