Friday, December 30, 2005

Outsourcing Is National Security Issue

A one-man terror style attack in Bangalore underscores the serious threat facing the US economy as American companies continue to send sensitive and mission-critical jobs to third world countries. (Time: Is Outsourcing the Next Terror Target?). What happened in Bangalore was simplicity itself from a terror attack perspective. A man walked into a conference at the Indian Institute of Science, tossed four hand-grenades into the crowd, and then opened fire with an AK-56.

In this instance, the attack was not aimed at US interests, however it did hit one of the most prestigious institutions in India and it targeted the center of India's thriving outsourcing industry. More to the point, though, is that a terror attack in India does not have to be aimed at US interests to have a devastation impact on the US economy. Neither does it have to be conducted by anti-American extremists. India has plenty of its own enemies, complete with extremist groups targeting India's infrastructure.

Information Technology is the core of all American companies, but for the financial sector it is the industry's life blood. Brokerage firms, banks, mortgage companies, and any other corporation even remotely involved in the financial industry simply cannot function without uninterrupted service to their information technology systems. Yet, these are the very companies that are sending their mission-critical technology jobs to unstable third-world companies in a misguided attempt to reduce their IT costs.

India, for its part, is the recipient of the majority of these outsourcing jobs, but in many cases they've simply become the middleman for the jobs' ultimate destination: Bangladesh. Indian companies, faced with rising costs as worker salaries rise to meet their American counterparts, are pushing those same jobs into Bangladesh because of the extremely low cost of labor in that country. What's wrong with that? Here is what the US State Department has to say about Bangladesh in a Travel Advisory issued on December 21, 2005:

An outlawed Islamist terrorist organization, Jamaatul Mujahideen Bangladesh (JMB), has taken responsibility for a series of bombings and suicide attacks in Bangladesh since August against a variety of targets. The half-dozen attacks have focused on the judicial system and local government institutions, killed approximately 30 Bangladeshis, and wounded nearly 200. JMB leaflets found at attack sites and sent to local media call for the implementation of strict Islamic law in Bangladesh, justify the use of indiscriminate suicide attacks, and condemn Western social and political concepts as un-Islamic. They also identify the governments of the United States and the United Kingdom as enemies of Islam. Newspapers and Bangladeshi non-governmental organizations, including several which receive funding from the United States Government, have received threats purportedly from JMB.
So there are Islamic extremists operating in Bangladesh that are conducting suicide attacks, condemn Western concepts, and list the US as enemies of Islam. Sure, this sounds like a great place to send our mission critical technology jobs!

A single attack in New York City on 9/11 closed the New York Stock Exchange for almost a week. Many small businesses operating in the World Trade Center never recovered, and the disaster recovery sites supporting major IT operations in the WTC were strained to the breaking point. How devastating would a targeted IT focused terror attack be in a third world country that does not have the infrastructure necessary to support large-scale recoveries?

The issue of outsourcing, especially to third-world countries, needs to be treated as a national security issue. Instead of lauding the use of outsourcing and using it as a political wedge between India and Pakistan, the Bush Administration must clamp down on this rampant threat to the US economy. Sending manufacturing jobs to countries with ultra-cheap labor is bad enough. But to send the life blood of our financial industries to unstable third world countries is absolute foolishness. Let's hope it is not a lesson we learn the hard way.



Alan Fraser said...

Defense contractors have been doing international outsourcing for years. I doubt if anyone really knows whether the military hardware could be replaced and adequately maintained in the event of a full-scale global war.

Manoj said...

Let me clarify first that India does'nt outsource the work that it gets to Bangladesh. India has a vast pool IT people, it will be years before it will run of resources. We have a population of a billion people out, so dont worry about the labour part. Terror is Terror , whether it is caused by islamic terrorist or a gang in new york. People dont stop living, because of minor hiccups. After 9/11 is'nt New York functioning. Citities will find its way to continue do its business. One or two insedents should'nt deter the minds of people.