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OM in the News: Outsourcing Accounting Jobs to India

October 2, 2015
Workers at Tata Consulting Services in India have replaced Americans

Workers at Tata Consulting Services in India have replaced Americans

When Congress designed temporary work visa programs, the idea was to bring in foreigners with specialized, hard-to-find skills who would help American companies grow, creating jobs to expand the economy. “Now, though,” reports the New York Times (Sept. 30, 2015), “companies are bringing in workers on those visas to help move jobs out of the country”.

For four weeks this spring, a young woman from India on a temporary visa sat elbow to elbow with an American accountant at the New Jersey headquarters of Toys “R” Us. The woman, an employee of a giant Indian outsourcing company Tata, studied and recorded the accountant’s every keystroke, taking screen shots of her computer and detailed notes on how she issued payments for toys sold in the company’s megastores. “She just pulled up a chair in front of my computer,” said the accountant, 49, who had worked for the company for more than 15 years. “She shadowed me everywhere.” By June, 8 Tata workers had produced intricate manuals for the jobs of 67 people. They then returned to India to train Tata workers to take over and perform those jobs there. The Toys “R” Us employees were laid off.

Employers must sign a U.S. government declaration that the foreign workers “will not adversely affect the working conditions” of Americans or lower their wages. In recent years, however, global outsourcing firms have obtained thousands of temporary visas to bring in foreign workers who have taken over jobs that had been held by Americans. But the Toys “R” Us layoffs — and others underway now at the New York Life Insurance, Cengage Learning, and others — go further. They are examples of how global outsourcers are using temporary visas to bring in foreign workers who do not appear to have exceptional skills.

A spokeswoman for Toys “R” Us said that the staff reduction there was part of “designing a streamlined, more efficient global organization to make it fit for growth.The outsourcing resulted in significant cost savings.”

Classroom discussion questions:

  1. Discuss the legal and moral issues here.
  2. How is this different from outsourcing manufacturing jobs to China?
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