President Obama has said many times that he will eliminate tax loopholes to companies that outsource jobs to other countries. It appears that he has solved the problem — instead of giving tax deductions to companies he is going to give them taxpayer money in order to subsidize the offshoring of jobs to Sri Lanka.

Despite President Obama's pledge to retain more hi-tech jobs in the U.S., a federal agency run by a hand-picked Obama appointee has launched a $22 million program to train workers, including 3,000 specialists in IT and related functions, in South Asia.

U.S. To Train 3,000 Offshore IT Workers, by Paul McDougall, InformationWeek, August 3, 2010

The Obama administration will spend up to $22 million to train 3,000 high-tech workers in Sri Lanka. According to a press release by the Sri Lankan Embassy the U.S. Agency for International Development (USAID) will establish seven mobile training centers in order to train unemployed and underemployed Sri Lankan students in skills that will help U.S. companies to offshore jobs there. Training will be provided at no charge — compliments of United States taxpayers.

USAID will provide the students courses in Business Process Outsourcing (BPO), advanced computer programming skills such as enterprise level Java, and English language skills. They will also get on-the-job training with American companies who are looking to take advantage of the Asian subcontinent's low labor costs.

In addition USAID will provide training and logistics for another 10,000 workers to provide labor for garment industries such as Tommy Hilfiger, Polo Ralph Lauren, Columbia Sportswear, Next, Tesco, and Burberry.  Emphasis will be placed on training widows, single mothers, and families with disabled members.

The training and funding of offshore workers stands in great contrast to statements Obama has made on the subject. Here are a few choice quotes:

Instead of giving tax breaks to corporations that ship jobs overseas, we want to give tax breaks to small-business owners who are creating jobs right here in America. Already, we’ve given small businesses eight new tax cuts, and have expanded lending to more than 60,000 small-business owners.

Weekly remarks: President Obama on Wall Street reform, LA Times, July 24, 2010

”It’s a tax code full of corporate loopholes that makes it perfectly legal for companies to avoid paying their fair share. It’s a tax code that makes it all too easy for a number – a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all,” the president said. ”And it’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.

Obama Calls for Curbs on Offshore Tax Havens, New York Times, 2009

Right now, we have a tax code that gives incentives for companies to move offshore. Instead, we must have a tax code that rewards companies that are doing the right thing by investing in American workers. Our government has to be looking out for these people who are working hard everyday trying to make ends meet and right now we’ve got a set of policies that are not reflective of that.

"Creating Jobs in America" , 2004

Barack Obama in His Own Words, By Lisa Rogak

The project will be managed by Rajiv Shah who was appointed as director of USAID by President Obama. To read more about Rajiv Shah go to his USAID bio and profile. Rajiv was born in Ann Arbor, Michigan in 1973 to Indian immigrants. Shah grew up in the Detroit area. His father, Janardan Shah, worked for Ford Motor Company and his mother, Rena Shah, ran a Montessori school.

Shah earned a B.S.E. in economics at the University of Michigan in 1995. At the University of Pennsylvania, in 2002, he gained an M.B.A. from the Wharton and an M.D from the medical school.

Hopefully Rajiv Shah and President Obama will receive a lot of heat for supporting the subsidization of vocational training in Sri Lanka but this has been going on well before Rajiv Shah and Barack Obama. A USAID paper indicates that U.S. funding of training of high-tech workers was ongoing in 1996 during the Bush era. They recognized that outsourcing was a growing trend and for political reasons wanted to accelerate it by using taxpayers money.

Jobs for the 21st Century: Sri Lanka Assessment

Prepared for USAID, Asia and Near East Bureau, Jobs for the 21st

Century Initiative, Sri Lanka | May 2006 | Final REPORT

Page 78: Business process outsourcing is growing in Sri Lanka.

Page 93: Description High-level IT

The RITC program is designed to rapidly convert unemployed non-IT university graduates into technicians ready for entry-level employment in IT. Program was implemented in 2005 by the Moratuwa

University and The Competitiveness Program, a USAID-funded program.

Evidence shows that the types of job training that is going on in Sri Lanka goes far beyond training farmers how to grow crops more efficiently — high and low level technical educations are given so that workers can take jobs for industries that have been offshored. I haven't researched all the companies that benefit from the training but one of them is Micosoft:

Microsoft is a key driver of the local IT industry and takes ICT  knowledge to all parts of Sri Lanka.  Microsoft serves the needs of the Sri Lankan IT industry, providing many opportunities in bridging the digital divide and making technology more readily available to everyone. Microsoft has supported the development of industry specific ICT Courses, tailor made for four key industries. This is envisioned to make thousands of young people employable in the mentioned industries.

Unlimited Potential Partnership’ Unveiled by Microsoft, USAID  & Infoshare, 2008

Perhaps it's a coincidence, or maybe another example of the revolving door in Washington DC, but Rajiv Shah worked at the Bill & Melinda Gates Foundation as Director of Agricultural Development and Director of Financial Services. The foundation wrote a recommendation letter to the Obama administration:

Statement on Dr. Rajiv Shah, USAID Administrator-Designate

The selection of Dr. Rajiv Shah as the next administrator of the United States Agency for International Development (USAID) demonstrates a commitment to providing strong, evidence-based, effective U.S. foreign assistance.  We have worked closely with Raj for several years and know he will bring the same commitment, intelligence and visionary management style to USAID.

"Statement on Dr. Rajiv Shah, USAID Administrator-Designate", Bill & Melinda Gates Foundation, November 19, 2009

In conclusion more research needs to be done to see how involved the U.S. government is in directly subsidizing the training of workers in foreign countries. It isn't far fetched to believe that Sri Lanka isn't the only place this is happening.