Indian outsourcing crash? - Harish Baliga

Indian outsourcing industry is headed for a crash and an outright depression – here is why? - Harish Baliga

Indian outsourcing industry is headed for a total and permanent collapse. India has systematically converted millions of its talented individuals into becoming phone operators and low-end software application programmers for American, European and Japanese companies. This will back fire like never seen before.

In a stagflation driven world economies, commodity prices are going up because of higher demands and comparatively much lower supply. However, people are making much less in western world especially in America and Europe as India and China continue to export their massive underemployment and wage deflation to the Western nations. People who used to make $100,000 annually in large American companies have lost their jobs and since then have found employment in small companies with $30,000 per year. The unemployment in America today is very low but every one is underemployed.

First the American and European companies had a sigh of relief in finding India and China where they can generate their goods and services for pennies on the dollar. Then came the reality. They just cannot sell these goods and services in their own markets because underemployment has grasped America, Europe and Japan. In addition Indian and Chinese qualities are way inferior. Then the American and European companies look into further cutting the cost of production of goods and service generation. With increased oil, gas and food prices as well shortage of real estate, wages are going up rapidly in India and China while quality of service and production of goods are at best same if not declining. The western companies now look for total automation to replace India and China. The robots and automated computer programs take control. The outsourcing contracts disappear in no time. India and China becomes dry and their economies literally collapse with steady fall in GDP and stock prices.

Any country that has become a super power has in the past first gone through a period of false boom, then a massive scary depression and then finally a recovery into sustainable growth period creating a new super power. That is exactly what happened to America between 1920s and 1940s. During 1920s American stock market boomed while economy actually ran on thin ice making a false sense of prosperity. Then came the stock market crash and the depression of thirties. Finally America became a real super power in forties and beyond. The same are repeating in India and China between 1995 and 2015. The false export driven boom is over. Now is the time for massive stagflation, increased global trade tension and protectionism. India and China will close their doors in no time once they find they cannot milk America and Europe. America, Japan and Europe will have little to care for India and China if it is evident that cheap workers of India and China can be more economically and efficiently replaced by computer automation, artificial intelligence and robotics.

India and China will eventually in the next ten years reinvent itself. They will create a free trade zone in Asia and make their domestic economies grow. India and China are destined to become sustainable super powers by 2030. The golden era of India and China will begin in 2015 and stretch from 2015 to 2085. However, for now things have to correct itself in the great Asian depression of the early twenty-first century.