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Risk

Obama Flip Flops On Outsourcing

President who promised to keep more jobs in the U.S. now says outsourcing to India is a "win-win" for both countries.

President Obama, who last year said U.S. companies should create jobs in Buffalo not Bangalore, appears to have had a change of heart on outsourcing's effects on the economy.

Speaking Monday at a press conference in New Delhi, Obama said the view that outsourcing costs U.S. jobs while enriching India is nothing more than a "stereotype."

The president, at the podium with Indian prime minister Manmohan Singh, said the notion India is stealing IT and other jobs from the U.S. is outdated. "I think both countries are operating on some stereotypes that have outlived their usefulness," Obama said.

"In every discussion I've had with Indian businesses, what I've seen is that our countries are matched up in a way that allows for enormous win-win potential," said the president.

Outsourcing, where U.S. companies send programming and other tech work to low-cost countries like India, has drawn considerable flak from worker groups. Obama looked to cash in on that sentiment in his presidential campaign, when he promised to make it more difficult—through adjustments to the tax code and other measures—for U.S. companies to send work abroad.

Last year, as president, Obama slammed tax laws that, in his view, made it easier for businesses to "create a job in Bangalore, India than if you create one in Buffalo, New York."

Obama seems to have altered his view. "We're very proud of our high-tech industries and we think we make some of the best products in the world, and we want to sell them to a growing Indian market," Obama said during Monday's press conference. "But it turns out some of those same technologies are ones that will allow Indian entrepreneurs to grow and thrive and create jobs right here in India," Obama said.

While the president's reversal on outsourcing may anger some worker groups that supported him during his run to the White House, many businesses may welcome the fact Obama has flip-flopped on the issue. A significant number of U.S. companies, from General Electric to Boeing and IBM, rely on ongoing access to Indian IT and engineering talent as they look to build products that are globally competitive.

Indian prime minister Singh also defended offshoring during the press conference. "Our outsourcing industry I believe has helped improve the productive capacity and productivity of American industry," said Singh.

Obama is in the midst of a ten-day tour of Asia that will also see him make stops in Indonesia, Japan, and South Korea.

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