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BPO backlash can hurt economy: Shourie

Last updated on: March 08, 2004 14:44 IST

India on Monday questioned the United States' stance on outsourcing with Communication and IT Minister Arun Shourie warning that the ongoing controversy could give a handle to opponents of reforms and said that America must understand New Delhi's political compulsions.

"It gives a very strong handle to persons in India who oppose opening up," Shourie told the New York Times in an interview while expressing discontentment over the ongoing controversy over the outsourcing issue.

"If the US feels that we must understand their political compulsions, why should not American politicians or trade negotiators understand our political difficulties," he wondered.

Lamenting the US, Shourie said those who lecture about free trade should practice it and added that whenever such issues rise in the competitive politics the economy suffers.

Shourie felt that outsourcing was surfacing as a 'political irritant' in the relations between the two countries.

Regarding opening up the agriculture, the minister said it would affect millions of people – 'far more than being affected by India's success in information technology.'

American officials, the paper says, have repeatedly expressed their frustration at relative low level of American imports to India. While total exports from American companies to India grew to $4.1 billion from $2.5 billion in 1990, the United States still has a trade deficit of about $9 billion with India, the paper notes.

The strong reaction to outsourcing in the United States, the paper notes, is spawning frustration in India, "a country that the United States was cheering not long ago as it began to open its largely socialist, closed economy and enter the global arena."

Observing that outsourcing is surfacing as a 'potential irritant' in the relations between the two countries, the paper points out that Indians say that they are doing exactly what the United States wanted and bridle at the new criticism as a double standard.

Vivek Paul, vice chairman of the Bangalore-based Wipro Technologies, describes the contention that a large number of American jobs are being lost to outsourcing as 'perceptual amplification.'

"If three million jobs have been lost in the United States and 100,000 jobs created in India, each one of those three million thinks, 'That's my job,'" he says.

Indians, the paper notes, say they face the same forces churning the American job market. As the use of information technology increases, so will the labour displacement that America has experienced. Over a period of time, many of the jobs that have come to India could move on.

As the competition emerges from other countries, Paul says, "We'll have to swallow the same medicine of globalisation."

In a separate article, columnist Thomas L Friedman, now reporting from India, stressed on American innovation to keep itself ahead of others.

"You have the whole ecosystem (that constitutes) a unique crucible for innovation," he quotes CEO Nandan Nilekani of Infosys as saying.

"I was in Europe the other day and they were commiserating about 400,000 (European) knowledge workers who have gone to live in the US because of the innovative environment there. The whole process where people get an idea and put together a team, raise capital, create a product and mainstream it - that can only be done in the US. That can't be done sitting in India.

"The Indian part of the equation (is to help) these innovative (US) companies bring their product to the market, quicker, cheaper and better which increases the innovative cycle there," he said, adding that it was the complimentarity that needed to be increased.

Maintaining that America has a real edge in innovation, Friedman says Bangalore has lot of engineering schools but the local government is 'rife with corruption,' half of the city has no sidewalks, there are constant electricity blackouts, the public school system is dysfunctional, beggars dart in and out of traffic which is in constant gridlock and the whole infrastructure is falling apart.

"The big high-tech firms here reside in beautiful, walled campuses because they maintain their own water, electricity and communications systems. They thrive by defying their political-economic environment, not emerging from it," he said.

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