Obama to ban outsourcing?

Obama is doing everything he can to stop the outsourcing of US work to developing countries. This is a knee-jerk reaction to the economic problems US is going through. I am not sure how it is going to help US economy. When companies should try to save every cent of expense, this will push them to spend more on local high-cost services. It will surely create some jobs, but jobs will continue only if the company survives. And in order to company to survive, they must cut the expenses on labour, raw material and other expenses.

This also presents an interesting point. Can we (or policy) differentiate between outsourcing of product and outsourcing of services? For example, a country prefers to import electronic goods from other country, isn't it outsourcing of the product. In simple words, this country is 'sourcing' the electronic goods from 'out'side country. To encourage local employment and entrepreneurship, should a country ban sourcing of goods from other countries? This will effectively stop international trade.

Let's take example of India. India imports food items, metals, automobiles, high-tech engineering goods, electronic hardware, software products etc etc, in turn India exports food items, low-tech engineering goods, textiles and software services, BPO services. Now if US bans outsourcing, India's service sector related to Software and BPO will have major impact. For India this is not fair as bulk of India's export is in services. Probably what India should do as symbolic gesture to US, it should ban 'outsourcing' of non-essential food items. So out goes Coca-cola, Pepsi, McDonald, Pizza Hut and KFC. India should ban outsourcing of inefficient automobiles. This will drive Ford and GM out. Of course this will cause many Indians to loose job unless these businesses are quickly taken over by local companies.

I know this is a very far-fetched scenario. Most likely US companies will negotiate with US government to separate out political agenda and business agenda. They will give some area to government as new government has to show that they are doing something to save jobs.