Chop Shop @ Infosys

Our politicians fight over every trivial issue, but we saw an unusual ideological unity across the political spectrum when it came to the ‘chop shop’ remark by US Senator Charles E Schumer.

During the discussion in US Senate of Border Security Bill, which aims to provide a $600 million emergency package for strengthening the porous US-Mexico border Republican Senator Schumer had described Indian IT Major Infosys and its peers as a ‘chop shop’ – the American slang for places where stolen cars are dismantled for their parts.

The industry bodies and politicians are outraged by the Senator’s snide remark. Congress’s Manish Tiwari says “The use of the phraseology for one of India’s premier IT company, and possibly one of the best in the world, is regrettable. To compare the company to a chop shop reflects complete non understanding of the contribution that Infosys has made to the global economy”.

BJP’s Ravi Shankar Prasad said “It is a flight of arrogance which also concedes that inability to compete fairly. It is because Americans have realised that other parts of the world, notably India, have the capability in entrepreneurship and quality services which are globally competitive as embodied by Infosys.”

While politicians across all hues come on prime time television to ‘sensationalise the insult’ and declare a ‘war with adjectives’, Indians in the US and more knowledgeable people in India, have been more dismissive. They and other US citizens used to another Republican President George Bush gaffes know Senator Schumer famously called ‘Chuck’ Schumer was indeed ‘chucking the whole word’ by mistake.

It is commonsensical that the Senator meant ‘body shop’ and not ‘chop shop’. My take on the whole discussion is that it is a rhetorical positioning by a man who faces re-election at a time of stubbornly high US unemployment (now standing at 9%). But even the use of word ‘body shop’ is not a very positive statement about outsourcers, like India, but certainly is not same as ‘chop shop’, which has more to do with stolen cars.  The Senator, however, might not apologise or clear up the confusion, because this posturing would work to his advantage in the impending elections.

But what Indian industry and politicians should be more worried is that the Border Security Bill, when approved by the Senate, would see significant hike in application fees for H1B and L1 visas, which are most sought after by Indian IT professionals. The Bill would hike the visa fees to $2000 per application on those entities that have less than 50% of their employees as US citizens. And the Bill is expected to increase the annual visa cost for India’s $50 billion outsourcing industry by $200-250 million annually. For example if the next year Infosys applies for 3000-4000 visas the impact could be $4-6 million (14 to 17% of Infosys revenue).

We might still have a cost arbitrage, but slowly it is decreasing. What are we doing about the shrinking cost arbitrage for outsourcing? Slowly the most ‘capitalist’ nations on earth is switching gear and behaving like the most ‘socialist’ to protect their economy. What are we doing about protecting our economy and protecting our jobs?

Photo : Courtesy Senator Charles Schumer’s official website.

    • Bindhu
    • August 11th, 2010

    Offbeat ideas and thoughts. Great going..

    Keep them coming


    • ramalingam ramaswamy
    • September 17th, 2010

    There is no scope for any reactionary action. Let us give out detail of original work being done by the Indian companies and also the support platform they have created to support any system on the globe. Now the Indian software industry is maturing and it is being looked upon as global competitor. Let us maintain majestic ‘elephant walk’ and enjoy the greatness we are gaining.

    I liked your article because there is “no slander against the US” as is the Indian mentality. Very insightful thought on cost arbitrage though.


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