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Home > Business > Business Headline > Report

US poll results won't hit outsourcing: Mulford

April 30, 2004 19:35 IST

American election results are unlikely to stem the flow of jobs to India and other developing nations where labour is cheaper as outsourcing is a reality of globalisation, the US envoy said in New Delhi on Friday.

US Ambassador to India David Mulford told a meeting of the American Chamber of Commerce in New Delhi that there could be no turning back on the outsourcing of US manufacturing and call centre jobs to India and China.

The shifting of employment to nations like India with its vast pool of English-speaking graduates willing to work for less pay than in the West has stirred huge controversy in the United States in what is an election year.

Last month, US Senator John Kerry, the challenger to President George W. Bush in November elections pledged to create 10 million new jobs in four years across the United States by fighting against the outsourcing of American jobs to countries like China and India.

Kerry has accused the White House of failing to stop the export of well-paying jobs.

"Outsourcing is not a US-India or US-China problem -- it is part of the phenomenon of globalisation. It has been demagogued by the media. It may be a good idea to educate politicians of the benefits so they can play down the issue," Mulford told the meeting.

"Mr Kerry, if he wins these elections, may have dug himself into a hole so deep that he may actually have to come up with some legislation. But I don't see it hugely disrupting US global business relations," he added.

"Outsourcing is part of the global economy. I don't think US legislation can change the course of global business. And, I don't think private US business is willing to accept any intrusive government interference on this issue."

In February, the US Senate passed a measure restricting government projects from subcontracting hi-tech work overseas, fearing job cuts locally.

The move followed similar bans in some US states against outsourcing government work to India and other countries.

The steps have sparked an outcry in India, although US government work accounts for a miniscule amount of information technology work outsourced to developing countries.

The US envoy also pressed India to go on a 'war footing' to improve its creaky infrastructure.

"India's objective of sustaining eight to 10 percent growth will prove to be unrealistic with its present infrastructure. It has to develop its power, roads, telecommunications, ports."

Mulford also said India should remove equity caps on foreign investment.

"India should remove equity limits on foreign investment -- not to please the US, though undoubtedly it would -- but to help itself grow. Without foreign capital, India's infrastructure priority will remain unfulfilled," he said.

India allows foreign firms to only hold a 49 per cent stake in local telecommunication ventures. It has foreign investment limits on a host of sectors from banking, insurance to airports.

-- AFP

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