India should liberalise to minimise outsourcing backlash: US

Tuesday, 09 December 2003, 20:30 IST
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NEW DELHI: Terming trade a two-way street, an American official Tuesday urged India to remove investment barriers for overseas companies in response to job losses in the US due to outsourcing to Indian firms. "Outsourcing offers India job creation and investment, provides US firms with improved efficiency and profitability, and ultimately serves to enhance consumer welfare," said Robert Blake, charge d'affaires of the US embassy in India. "This would seem to present a true win-win situation. But to succeed, trade must be a two-way street," he told an IT industry summit here. "Indians must realise that there is much painful dislocation and job loss in the US and this could become a political problem. The answer to the economic challenges that we face in today's globalised world is not to restrict outsourcing. "It is to open markets. An open international trading system has the benefit of more competitive markets, greater diversity of product choice and improved access to innovation." Blake said the best means of ensuring sustained growth was through "broader economic liberalisation and the removal of barriers to investment". India's vast pool of English-speaking and cheap manpower, educational system and training programmes have helped transform the country into a global business process outsourcing (BPO) superpower. The rapidly growing BPO industry has turned the country into an electronic housekeeper to the world, taking care of a host of routine activities for multinational giants. More than a quarter of Fortune 500 companies like General Electric, American Express, British Airways, HSBC and Citibank are shifting their back office operations to India. India is, however, now beginning to face a labour backlash in the West over outsourcing which unions argue results in large-scale job losses in their countries. The US state of Indiana last month dropped a $15.4 million outsourcing contract for IT services with an Indian software company. Blake said US companies were increasingly working with their Indian partners not just to develop call centres, but to conduct highly sophisticated research and development. "General Electric, Intel, Cisco, Lucent, Ford and Texas Instruments are just some American companies that have set up high-end research and development centres in India," he said.
Source: IANS
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