Minister's support for outsourcing at the WEF

Among the several events hosted at the World Economic forum (Davos), a discussion was held on "Managing Global Risks", in which the Indian Union Minister Kamal Nath shared the stage with other global heads. The event host asked different questions to the participants, which revolved around the topic of various risks in the current environment. Mr.Kamal Nath was asked about the 'Protectionism' which is prevalent across the countries. Protectionism is "the policy of imposing duties or quotas on imports in order to protect home industries from overseas competition". Kamal Nath clearly spoke against protectionism followed by various countries at the time of this economic crisis. He added that, Protectionism is kind of a panic response whenever a crisis looms in a country. He cited an hypothetical example in Auto industry. If a country is adding import duties on the auto components, it would definitely increase the price of the vehicle for the consumer.

As he was talking about the perils, he moved his topic towards Outsourcing. He told the panel and the group that, if protectionism is carried out it outsourcing, the competitiveness will definitely decrease and will affect the growth of the company, as the cost is finally transferred to the consumers. He also added that, lack of skill and better cost is pushing the companies towards outsourcing. Kamal Nath's response at a cardinal stage like WEF, is kind of response to the Obama's proposal to cut taxes for the companies which outsource the jobs. Though, the new president is not very keen on this campaign proposal at this time of crisis, the recent letter from Senator Grassley to Microsoft has started the 'protectionism' issue once again. The senator urged Microsoft to give American workers priority in the layoffs. Infact, Grassley, with Sen. Richard Durbin, D-Ill., is pushing for legislation to make employers recruit American workers first, along with other changes to the visa program.

But, Carl Guardino, the CEO of Silicon Valley's Leadership Council has a different view. Below is his response on CNBC:

He says in the tech industry today, 53 percent of the engineers are "foreign born" and half the CEOs and founders of tech companies are foreign born.

"If America ever goes against our strong roots of welcoming talents from around the world, wanting to work here, contribute here, be a part of America, that's the day that we are risking everything that this democracy is about," he says. "We cannot take an attitude in good or bad times that suddenly we should be throwing immigrants out."

The bottom line: As grim as the economy is today, and as much as we might want to protect our citizens from losing jobs to foreigners, giving US citizens the inside track because of their citizenship over their abilities is a short-term fix with long-term, negative implications. If a US worker's skills are equal to the skills of a non-US citizen's, then sure, the US worker should get the job. Go Team! If it's about salaries and money-saved, and how much more cost-effective a foreign-born worker might be over his US counterpart in a similar position, then legislators and companies need to re-work the H1B visa program.

But if it comes down to cutting your engineering team because they're all from India so you can keep your American born employees on the shipping dock, you shouldn't have to lay off your engineering team just because they're foreigners.The whole idea here should be about hiring the best and the brightest, no matter where they're from.

It's the only way US companies, or any company, can expect to compete in a global market. Period.

Easy to become xenophobic in an economic climate like this one, though we do so at the risk of not just dulling our competitive edge, but losing it completely.

Tags: outsourcing, WEF, India at WEF, World Economic Forum, Kamal Nath