Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

IT offshoring: Romney vs. Obama

Patrick Thibodeau | July 6, 2012
Offshore outsourcing, from the manufacturing to call center industries, has become a major issue in the 2012 presidential race.

Kontogouris is a managing partner at Cloud Capital Partners.

New Jersey-based Cognizant, which has more than 140,000 employees, is one of largest offshore outsourcing companies in the world.

It began as a Dun & Bradstreet in-house development services business in 1994 and was split off two years later. D&B owned 51% of the total outstanding shares of Gartner and as part of its spin-off strategy transferred ownership of Gartner to Cognizant, which soon transferred its ownership to another entity.

It was Romney's his job to understand technology trends, including offshore outsourcing and to put Bain on a path to take advantage of them. There's nothing in his record to suggest he did otherwise.

What will Romney do about IT offshoring?

Romney has not yet raised IT offshoring as a campaign issue.

According to Romney's platform documents, he sees trade agreements as a means to job growth since "95% of the world's consumer live beyond our borders."

Romney is calling for a tougher U.S. response to China for "misappropriating Western technology," and for what he calls its indigenous innovation policies that are "forcing American companies to share proprietary technology as a condition of their doing business in China."

What will Obama do about IT offshoring?

President Obama wants to curb offshore outsourcing, but appears to be more focused on manufacturing than IT.

Obama says the tax code encourages offshore outsourcing, but many of his tax proposals, such as deductions for moving expenses, concern manufacturing and not knowledge-based work that travels over a network.

Democrats in Congress have also pitched laws offering relief from the employer share of Social Security payroll tax on new U.S. employees. Such laws would require that companies certify that a U.S. worker is replacing an employee who had been performing similar duties overseas.

The impact of these proposals on IT offshoring, including tax code changes, has received mixed reviews so far.

The legislation could encourage some companies to create jobs in the U.S., and thus slow their use of overseas labor. But the formula for using offshore resources is complex and tax benefits are but one consideration.

What does Obama know about the offshoring views of his advisors, and when did he know it?

Romney's investment record at Bain will get scrutiny. But it's fair to point out that some Obama advisors have advocated or led firms that used offshore outsourcing.

For instance, the President's Council on Jobs and Competitiveness is headed by General Electric chairman and CEO Jeffrey Immelt, whose company was one of the first, in 1990s, to establish a development center in India.

In 2009, Obama appointed Diana Farrell, a former director of the McKinsey Global Institute, McKinsey & Co.'s economics research arm, to the National Economic Council as a deputy economic adviser to the president.


Previous Page  1  2  3  Next Page 

Sign up for CIO Asia eNewsletters.