The Australian | February 24, 2004
INDIAN IT leaders say they are not concerned by what they see as Western "arm-twisting" for the country to open its markets to offset jobs that rich nations have lost to offshore outsourcing.
US Trade Representative Robert Zoellick last week urged India to open up its markets to help kickstart stalled World Trade Organisation talks, but India rejected the call in the absence of a quid pro quo on agriculture, which it argues is heavily subsidised in the US.
Zoellick says India can ease concerns about job losses in developed nations by opening new business opportunities in return for outsourcing work.
Indian Commerce Minister Arun Jaitley replied by calling on developed nations to cut their agriculture subsidies to facilitate two-way trade in areas such as the farm sector.
The West is promoting protectionism, he says, citing US bans on outsourcing of government projects to India.
Vinay Deshpande, spokesman for India's top trade lobby, the Confederation of Indian Industry, and chief of Encore Software, says the move will not affect India's outsourcing sector.
"It is arm-twisting. It is posturing and just that. The industry is not worried about it.
"It is one good way to know the position of each party in the dispute. This is a signal for outsourcing firms to add value rather than focus on cheap labour," he says.
According to Forrester Research, in the next 15 years more than three million US jobs, representing $US136 billion ($170 billion) in wages, will go to places such as India, with IT leading the move.
US-based software giant PeopleSoft confirmed that trend last week by announcing it will hire another 1000 software professionals in India by the end of the year.
British information giant Reuters says it will recruit 200 Indians this year at a new data management centre in Bangalore to cash in on cheap labour, and relocate another 150 jobs to the centre.
India, the back-office of the world, is riding a wave of outsourcing from foreign banks, airlines, financial institutions and media amid protests about job losses in the US and in Europe.
"The posturing is not new," says Krian Karnik, president of the National Association of Software and Service Companies, India's premier IT body.
"It is not a cause of worry, as such things happen even between the US and the European Union." In the WTO talks, India has been demanding free movement of labour and more visas for its software engineers.
Ashok Reddy, managing director of TeamLease Services, which contracts employees to outsourcing firms in India, says it is the first time outsourcing has been linked to trade issues, but dismisses concerns on the matter. "It is not really a cause for worry," Reddy says.
"The economic benefits of outsourcing are too large for any organisation.
"It is not an acceptable linkage as they are two different issues.
"The US government portion of outsourcing is not very large compared with corporate outsourcing. There are sufficient orders in the corporate pipeline to keep us busy." The Hindu, an Indian national daily, says in an editorial titled "Mr Zoellick comes calling" that proposals in the US to restrict outsourcing make it difficult for India to support the larger agenda of WTO-driven trade liberalisation.The Australian:
