Indian Zealots And Outsourcing
By Swetha Sivaram, Sulekha.com

There is a 'feel good' factor all around India that the economy is growing fast. Here are 3 reasons why. For one, with a booming outsourcing market, India has become the IT hotspot. Secondly, India's GDP has grown about 8.4 percent in the year through the third quarter, making it one of the fastest growing nations in the world. Lastly, foreign exchange reserves are above 100 billion dollars.

India should not be feeling good, it should be feeling great and with good reason. But from the great feeling comes the old Indian habit of hyping that it will be the next superpower. Is that true? Are we really going to be a superpower? Or is it just bloated arrogance and hubris?

When I say arrogance, look at the rhetoric of the elite. Take a look at former Army General Padmanaban's book, India Checkmates America 2017. The third part of this book deals with a 60-hour war with the US in 2017 and how it ends with the intervention of the United Nations Security Council and other peacemakers but only after India humbles the US with the help of Information Technology. Such hype may make patriotic people 'feel good' but in reality such books should be banned like that of Salman Rushdie.

The reality is that India had an early advantage in IT because of the large English-speaking population thanks to the British legacy, and mathematical versatility. But now the other Asian nations are catching up. Students in the US, especially the Chinese, Koreans and Japanese are stronger now in mathematics and in future, these other Asian nations are going to be equal if not better.

Another reality. The prevalent feeling in the USA is that the country is hit hard by outsourcing. It lost three million jobs in the last three years. All the other newly created jobs are usually low paying jobs, just above the minimum wage. As a Republican said in the Time, “The economy may be recovering, but the people are not feeling it.” The so-called safe white-collar software jobs are drifting away to overseas workers in India and China. The manufacturing jobs are already a lost cause with jobs either having drifted to sweatshops in China or its amigo to the south, Mexico. Add to that a staggering amount of $86 billion a year due to the war in Iraq and a whopping $477 billion deficit; you can almost smell the house burning, and the American public fuming.

As Arundhati Roy said, the only thing that is more powerful than the American Government is American civil society. American citizens when agitated can stop a war in Vietnam fought thousands of miles away from home, protest the war in Iraq and can stop the 'out' in outsourcing. The Democratic Party, the rival to the current party in power can be heard miles away with its howls of stopping 'free trade' and the leading democratic candidates, John Kerry and Edwards vow to stop jobs from going overseas. India's best bet seems to be the current President of the United States, George W. Bush. Yes, the same King George who has been declared by 71% of the world as the most dangerous man on earth.

Do you know why? Because Bush will not stop outsourcing. He is a businessman and his friends (including Vice-President Dick Cheney) are also business cronies. Why would he hamper business interests that profit from outsourcing? Bush's economic advisers are even now defending outsourcing as inevitable in the free trade scenario and trying to continue the present policy, which is beneficial to India.

When compared to competitor, China, India has a disadvantage. IT outsourcing can be stopped anytime if the US business firms are given incentives. This is what the Democrats are promising Americans if they get elected this November. But, jobs gone to China are gone forever as they are manufacturing jobs. The US no longer has the manufacturing infrastructure to bring the factories back from China. Bush's Texan rhetoric 'Bring them on' will work only for the IT Sector.

It is true that there will be counterattacks by India in other spheres and there will be restrictions imposed on US imports if outsourcing is stopped. In the world of free economy, outsourcing is inevitable and the job loss is painful reality, and this is the message Bush is trying to convey to the American people through the economic team.

But what is of concern is the over-dependence of Indian IT companies on US business. For instance, Infosys has only 2% domestic business while 98% comes from abroad (75% from US). What would happen if 50% of the US business were to go off? All the growth will stop and will have serious consequences. Whereas only low skilled people work at call centers in the US, highly qualified educated people in India are employed at call centers. Dell and other companies are realizing now that the cost saving by off shoring the call centers is resulting in customer dissatisfaction. Thus, they have brought back their call centers to the US. What would happen to these qualified people if the call center business were to go out of India? Where would these candidates fit in?

Every country has its own self-interest first. The US is no exception. It is for India to make the best use of this good opportunity and plan for a better future for the people. Let us not waste time with arrogance and pride. As management guru, C. K. Prahlad of Michigan University said, “What India needs to do now is to be humble. Be humble and take the money.” This is what China is doing. Unless India harnesses its strength, it may not benefit in the long run.

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