India Takes Economic Spotlight, and Critics Are Unkind

The New York Times ^ | March 7, 2004 | AMY WALDMAN

[AM2000]

BOMBAY, March 2 — India has finally arrived on the global economic scene. Unfortunately, like a debutante suddenly told she is wearing the wrong dress, it is not exactly the triumph India imagined.

In recent weeks, the outsourcing of white-collar service jobs to places like this financial capital on the Arabian Sea has become the focus of the American presidential campaign, the brunt of jokes on late-night shows, the subject of angry Web sites, and the target of legislation in more than 20 states and Washington.

Long caricatured in many American minds as home only to snake charmers and poor people, India is now being caricatured as a nation of predatory brains set on stealing American jobs.

The strong reaction to the shifting of jobs is spawning frustration in India, a country the United States was cheering not so long ago as it began to open a largely socialist, closed economy and enter the global arena. It is also surfacing as a potential irritant in relations between the countries. Indians say they are doing exactly what the United States wanted, and bridle at the new criticism as a double standard.

"The U.S. is propagating capitalism — we don't really understand why they are so scared," said Ravi Shankar, 36, an employee of Tata Consultancy Services, India's largest technology services company. "If you're going to talk about competition, you should have no fear — may the best man win."

But now India's pride has become America's pain. Over the last decade, riding technology advances, India's engineers and English-speaking college graduates have been taking on more work — from credit-card complaints to software programming to research for American companies half a world away.

The uproar over outsourcing shows no signs of abating, because outsourcing itself is only likely to grow. India's success has both contributed to and coincided with stagnating employment in the United States. Both countries face elections this year. As a result, an issue that would largely be confined to corporate America has become politicized and emotional. "India has joined the ranks of other big job thieves — Japan, China and Mexico," the Indian magazine Outlook wrote this week, citing a "barely concealed racism" in Internet debates. Senator John Kerry, the likely Democratic nominee for president, has called chief executives who shift work abroad "Benedict Arnolds."

"Whenever such issues are taken up in competitive politics, the economy suffers," said Arun Shourie, India's minister for disinvestment, communications and information technology. He has spent the last two years fighting to privatize India's bloated state-owned enterprises, facing fierce political opposition along the way.

Indeed, the furor in the United States is highlighting India's own ambivalence toward the economic reforms that began here in the early 1990's. The competitiveness of India's new industries stands in sharp contrast to the high tariffs and red tape that still shelter many other parts of the economy.

American officials have repeatedly expressed frustration at the relatively low level of American imports to India. While total exports from American companies to India grew to $4.1 billion in 2002 from $2.5 billion in 1990, the United States still has a trade deficit of about $9 billion with India. On a visit to New Delhi in February, United States Trade Representative Robert B. Zoellick cited India's high tariffs — like a 38 percent applied agriculture tariff, which is three times as much as America's. "We want to keep our markets open," he said, "but to do so we need to be able to open markets abroad."

His comments were interpreted here as evidence that the Bush administration would seek to use the reaction toward India as a lever to pry open wider India's economy.

Mr. Shourie said that when India finally opened its agriculture markets, it would affect "millions of people" — far more than are being affected by India's success in information technology. "If the United States feels we must understand their political compulsions," he asked, "why is it that American politicians or trade negotiators sitting at the table would not understand our political difficulties?"

He worries, he said, that the reaction in the United States will strengthen the opponents of India's own economic reforms. "It gives a very strong handle to persons in India who oppose opening up," he said.

Indians say that the beneficiaries of outsourcing are far fewer than Americans realize. Well under a million people work in information technology services. Most of India's population of more than a billion, still largely rural, has never heard of outsourcing or benefited from it. Unemployment in India — far higher than in the United States — is at its highest level in decades, many economists say. Officially pegged at 7 percent, with more than 40 million registered job seekers last year, the real unemployment rate is probably three times that, economists say.

Vivek Paul, vice chairman of the Bangalore-based Wipro Technologies, calls it "perceptual amplification."

"If three million jobs have been lost in the U.S., and 100,000 jobs created in India, every one of those three million thinks, `That's my job,' " he said.

The danger is that anger in the United States will affect relations with India that otherwise have only deepened in recent decades. There are nearly two million Indian-Americans in the United States today — with the highest income of any ethnic group — and India is the second largest country for legal migration to the United States, after Mexico.

The United States now has more foreign students from India — more than 70,000 — than from any other country, and the information technology industry itself seems to represent a sort of synergy, with many Indians working in Silicon Valley, and innovation flowing both ways.

That spirit is showing strains. While Indian officials have decided that their best strategy is to let American corporations fight the political battle in the United States, they cannot resist the occasional rhetorical flare-up. "Those who lecture about free trade," Mr. Shourie said, "should practice it."

But not everyone here cheers India's new identity as what Babu P. Ramesh, writing in the Economic and Political Weekly, called "one of the prominent electronic housekeepers to the world." Indians say they face the same forces churning the American job market. As the use of information technology increases here, so, too, will the labor displacement that America has experienced. And over time, many of the jobs that have come to India could move on. As new competition emerges from other countries, Mr. Paul of Wipro said, "we'll have to swallow the same medicine of globalization."

[AM2000]

ping

[Brimack34]

Why does it take white collars to get attention. We blue collars never get this much press.

[vp_cal]

bookmarked

[AM2000]

You sure about that? I'm only 28 and started paying attention to this stuff no more than 8-10 years ago, but I seem to recall hearing quite a lot about manufacturing jobs being sent over to the maquiladoras in Mexico and the giant sucking sound and all that... I think you jsut don't hear about blue collar jobs anymore (as much) cuz that's "old news" - this white collar thing is the new game in town :-)

[NRA2BFree]

If you're going to talk about competition, you should have no fear — may the best man win."

They didn't get these jobs through competition, they got them because they prostituted their skills for low wages to greedy American corporations. Losing jobs to people who are more qualified is one thing, but when a company shuts their doors in America and moves off to India, competition is NOT in the equation.

[NRA2BFree]

I think you just don't hear about blue collar jobs anymore (as much) cuz that's "old news"

Maybe it's because they're all gone.

[AM2000]

They didn't get these jobs through competition, they got them because they prostituted their skills for low wages to greedy American corporations.

That's an unfair statement. The wages these Indian employees get are actually quite high for the Indian labor market. That's why you have Indian MBA's clamoring for telemarketer positions with U.S. based multinationals! As for greedy American corporations - I can't say you don't have a point, but I will say this... if some of them do it, they all have to do it, just to stay competitive.

[AM2000]

They're not all gone. There's a mill somewhere that still employs somebody ;-)

[Brimack34]

I agree but it seems to be more political now that the whites have been hit.

[DustyMoment]

Bush has responded to the clamor about outsourcing by challenging American white-collar workers who have lost their jobs to "be more innovative".

Here's a thought, Prez, why don't you challenge the indians to "be more innovative" and develop their own industries so we can keep our jobs here? If, by developing their own industries they can legitimately take business away from American corporations, so be it. But, they should have to work for it, not have it handed to them.

This trend of "globalization" is just another form of wealth redistribution by corporate America as we are lead toward One World Government.

Future interstellar travelers to Earth will be greeted by the following sign: Welcome to Planet Earth. We're sorry that no one is here to greet you. We have gone to Mars in search of work. Enjoy your visit and tell all of your friends about Planet Earth. Have a good day.

[NRA2BFree]

They're not all gone. There's a mill somewhere that still employs somebody ;-)

Shhhhhh, don't let them hear you, or they'll sneak those jobs right off to India. ;)

[lelio]

Why does it take white collars to get attention.

I was cognizant of the issues in offshoring in manufacturing -- however there was always room for advancement in the blue collar realm. Step up to being a skilled machinist, or the shop foreman. Or send your kids to school to become an engineer.

But where do the white collars have to go after their professions have been offshored? Graduate to being a WalMart greeter?

The people really getting screwed in this are the blue collars that sent their kids to college and now see their jobs being offshored to countries that have 10% of our cost of living.

[AM2000]

But, they should have to work for it, not have it handed to them.

Do you actually think Corporate America is going to hand over anything to anyone? They're sending jobs to India because the people in India work for less, the cost benefits of which offset any possible loss in productivity. The Indians are, in other words, working for what they're getting. They're playing by the rules our government has agreed to play by. The real crux of the matter, IMHO, is that the rules agreed to by our government look after the interests of our corporations but not our people. For example, if it's so darn easy to move capital and jobs to India and China and Ireland, shouldn't it be as easy for labor to move too? Whether we'd like to or not, we should certainly have the option to do so. But while barriers for capital and jobs have been broken down through trade treaties, barriers to labor remain. The capital can move away but we're not allowed to go after it. In other words, our own elected representatives have handicapped us in this globalized workplace since they've allowed our jobs to go overseas and overseas workers to come here and take our jobs, but they haven't pushed foreign governments to allow us to chase the jobs or even the capital. Heck, at the very least, I'd like the opportunity to invest in Indian markets with the same independence of an Indian investor. But I'm not allowed to.

[Nateman]

Its amazing how callous and selfish the posts I see above. All we can worry about is some American
losing cozy jobs. Life in India is brutal, harsh and short. Decades of socialism have reduced them to
such a low standard of living that their slums and poverty are examples to the rest of the world of just
how bad things can get. Its become a cliché to have the charities of the world film is some germ
ridden spot in India and ask for your money to help. Now when these poor people who live in such
abject misery have a chance to earn a decent living doing honest work, without any kind of
government handout , we ignore their plight and worry instead that we won't be able to afford getting
coffee at Starbucks anymore. This from the very same people who are moved by the example of
Jesus suffering on our behalf in "The passion of Jesus Christ". Would Jesus be so blind to the plight of
India as we have been!

[AM2000]

Most men will yell in pain when kicked in the stomach. That's just how it is.

[superloser]

My complaint about India is a simple one.

They expect "free trade" from us and for American companies to continue sending work over there.

At the same time, they keep a very stiff protectionist barrier in place.

Can't have it both ways.

My opinion: Either they drop their walls or we should cut them off. No double-standards.

[Bombay Bloke]

Yeah, but if we want them to drop their tariff barriers on agriculture - the industry most Indians work in - they can expect us to drop our massive agricultural subsidies first. Free trade should mean free trade.

[Cronos]

Losing jobs to people who are more qualified is one thing, but when a company shuts their doors in America and moves off to India, competition is NOT in the equation.

Not really: When Wal-Mart sells more than other stores their USP: the cheapest store, works. That doesn't mean that the expensive quality stores go out of business, it means that the other stores that have a USP of cheapness have to compete with Wal-mart. Ditto here, the best professionals will still get high paying salaries, but it won't be an industry for schmoos that get a 2 week course on idiots guide to programming.

[Cronos]

But where do the white collars have to go after their professions have been offshored? Graduate to being a WalMart greeter?

The good ones won't lose their jobs. THe good desginers, programmers etc. will always be worth it and they will survive. BUt the ones who just rode the wave in the 90s with little or no programming skills will be left by the wayside -- and those are the ones making the biggest noise -- because they want mediocrity to pay as well as it used to. Well, sorry, it won't, the bubble is gone and the supply is not so far below demand as it used to be.

[Cronos]

Would Jesus be so blind to the plight of India as we have been!

And more so, I have tremendous respect for a country that:

1. Stops begging us to hand out aid to them (like most of the African and South American states do)
2. Manages to keep it's Republic running with regular elections when all other countries around it have falled to multiple dicatorships (Burma, Pakistan, Bangaladesh, Thailand, Singapore)
3. That gives us the best bulwark against COMMUNIST CHINA and THE ISLAMC WORLD.

[Cronos]

At the same time, they keep a very stiff protectionist barrier in place.

They've been told to reduce those barriers and ARE reducing it, albeit gradually. They do have 300 million poor farmers, dirt poor farmers, worse than the dust bowl during the depression. SO, you want these folks to starve? They will have to put in opening things gradually or else we'll have another communist revolution with masses of poor people.

The article does bring out the poitn that India's trying to better its lot without asking for perpetual handouts and it's getting kicked in the face for it. This doesn't bode well for an alliance against the chicoms or the slamics. They may well get po'ed so badly they turn completely away from us -- like what Clinton did t Russia. In Russia's time of need, Clinton refused to really help it out. And now the Russians wouldn't become out allies, even those an alliance is logical

[yankeedame]

Why does it take white collars to get attention. We blue collars never get this much press.

Really,darling, that's so...so blue collar of you to ask.

[Jimmy Valentine]

This will last until the first class action lawsuits against those same corporations get rolling.

These outsourcing companies have forgotten a few things about their precious low cost new sources;

1. Copyright and patent protection? - a fiction,

2. Security of files against identity theft? - a joke,

3. Ethics in management? - They think we are chumps,

4. Respect for our laws including tax? - Something to ignore until caught

5. Integrity of data? - India alone is the source of major computer viruses and worms.

The "short-run maximizers" who run so many of todays corporations have sacrificed every value, every standard, and most of the ethics on the blood soaked altar of the conventional wisdom of the short run dollar.. They are sowing the wind.

Regards,

[DustyMoment]

Ok, once again. No, they have not worked for our jobs, our jobs have been handed to them by the American corporations to whom those jobs belong. The current trend in American business is increase the bottom line at any cost; that includes destroying America so that stockholders can get an extra quarter in their dividend check. The problem is NOT that our government won't allow us to chase after the jobs or invest in Indian markets. Our government will let any of us go to India or invest to our heart's content.

The real problem is this: if you want to go to India and chase your job, you are free to go; no one will stop you - no one in the US, that is. IF you get hired by an Indian company (don't hold your breath), you will have to work for Indian wages; substantially less than American wages. And, as a foreigner working in India, a socialist country, you will likely not receive the subsidies from the Indian government that Indian citizens doing the same work will recieve, which means that you will really be working for slave wages and have the opportunity to discover the joys of poverty in a foreign country. Not a good idea.

The problem is that, as of today, the playing field is NOT level. India and China (among other nations that our jobs are being shipped to) have imposed a tariff/tax subsidy that makes it difficult to get American goods INTO India (for example) for sale at an affordable price and take jobs away from them. To level the playing field so that Americans are not at a disadvantage in this marketplace, we need our government (at a minimum) to eliminate corporate income taxes and introduce a national sales tax. If the corporate income tax AND a lot of the regulations on American businesses are eliminated, the job climate will change drastically. Jobs will be flowing to America faster than we can fill them and all those illegal aliens occupying the country will even have a shot at better jobs than busing tables or construction.

Surprisingly, there is growing interest in Congress to do this. More, however, the Congress simply wants to make it harder for corporations to ship jobs offshore. IMO, that's the wrong approach, but it is A solution; just not the best one. Trying to force American corporations to keep the jobs in America is counter-productive. What we need is an incentive that makes American corporations WANT to keep the jobs here instead of forcing them to keep them here. That incentive is the elimination of corporate income taxes and the imposition of a national sales tax.

[Pharmboy]

The pics from the article:

Santosh Verma for The New York Times
The call center of Wipro Technologies in Bombay. The outsourcing of jobs to India has provoked an emotional reaction in the United States.

Santosh Verma for The New York Times
In Bombay, two Wipro employees
took calls recently from
Americans. Despite such service
jobs, Indian unemployment is
relatively high.

[Brimack34]

I own a machine shop skilled as I am. But I still do not wear a suit, thus I am blue collar I guess. Over looked under paid and you need me. You have to make things to survive as a Country. You can not just push paper's and have meetings and call a day.

[swarthyguy]

When people start beating you up, it means you have made it.

People forget the Internet Web PC boom came out of the 1960's technology push.

The US has lost faith in its spirit of advancement and exploration. A full bore techno space robotics program could be the impetus for new technologies in the US and the subsequent spinoffs.

China stopped exploring the coast of Africa in the 15 and 16 Centuries. They paid bigtime for that loss of nerve.

[NRA2BFree]

That's an unfair statement.

No, it's not at all unfair.

The wages these Indian employees get are actually quite high for the Indian labor market.

Bingo! The key words here are "QUITE HIGH FOR THE INDIAN LABOR MARKET,"which means that they are prostituting their skills to greedy American corporations for wages that are MUCH LOWER WITH NO BENEFITS! That's NOT competition. IF they demanded the same wages and benefits that Americans were getting, the companies never would have relocated to India.

That's why you have Indian MBA's clamoring for telemarketer positions with U.S. based multinationals! As for greedy American corporations - I can't say you don't have a point, but I will say this... if some of them do it, they all have to do it, just to stay competitive.

The ONLY competition that Indians have done is the competing they do against each other as American companies are deciding which Indians they are hiring from the pool of Indian applicants. I don't feel sorry for their MBA's having to work as telemarketers. If they can't get one of the American jobs that are now in India, it's because of the competition between applicants IN INDIA!

[NRA2BFree]

You'll like this one. ;)

[AM2000]

You're saying you expect Indian workers to ask for US salaries, and if they don't they're not really competing?

That's liek saying Walmart isn't really competing with more expensive mom-n-pop shops because their prices are lower. It's like saying, let's see if they get all that busienss if they charge just as much as the competition! The whole point of competition is to provide a similar service at a lower cost and that's precisely what the Indians are doing.

[NRA2BFree]

You*re saying you expect Indian workers to ask for US salaries, and if they don*t they*re not really competing?

NO, I didn*t say that YOU did.

That*s liek saying Walmart isn*t really competing with more expensive mom-n-pop shops because their prices are lower. It*s like saying, let*s see if they get all that busienss if they charge just as much as the competition! The whole point of competition is to provide a similar service at a lower cost and that*s precisely what the Indians are doing.

LOL...NO, it isn*t. Walmart is a business and it competes with the mom and pop stores and they are businesses too. That has NOTHING to do with Indians competing with Americans for jobs that are located in India. Don*t compare businesses to people. The ONLY people competing for those jobs are INDIANS. They are competing against each other, NOT against Americans!

The Indians did NOT take jobs away from Americans because they*re more qualified. GREEDY AMERICAN CORPORATIONS TOOK JOBS TO INDIA. Why? Because the Indians prostitute their skills out to those GREEDY AMERICAN CORPORATIONS for cheap wages.

Let me assure you these companies will bring them back to American workers IF our government gets rid of the corporate taxes, etc that make it more costly to do business in America.

Unfortunately, many of the Indians CANNOT speak good English AND even those that can don*t have a good comprehension of English. It*s too difficult to talk to them. They don*t understand what you are asking them. I KNOW this for a fact. They have NO business working in customer service.

[AM2000]

The ONLY people competing for those jobs are INDIANS. They are competing against each other, NOT against Americans!

Incorrect. Americans are competing as well, it just so happens that we've managed to price ourselves right out of the market.

...IF our government gets rid of the corporate taxes, etc that make it more costly to do business in America.

Exactly. Due to business conditions in this country - conditions that have been imposed by our elected representatives, we've priced ourselves too high. The Indians are competing with us, but we just can't match their prices.

Unfortunately, many of the Indians CANNOT speak good English AND even those that can don*t have a good comprehension of English.

I'm in IT and deal with Indian tech help desks for our vendor products all the time. Many of them do not speak good English, but many of them do - and they can comprehend just fine. You're exaggerating.

[Cronos]

Integrity of data? - India alone is the source of major computer viruses and worms.

Where did you get that???? the major source is in the US....

The rest of your arguments are equally ludicrous: they HAVE the laws in place or the companies wouldn't send it there -- their data protection laws are modelled on our own.

[Cronos]

you will likely not receive the subsidies from the Indian government that Indian citizens doing the same work will recieve,

NO countries subsidises it's citizens in the manner you're speaking of? What are you talking about? I've never read of any subsidy given to the citizens.

[Cronos]

which means that you will really be working for slave wages and have the opportunity to discover the joys of poverty in a foreign country. Not a good idea.

And, the amounts paid to these workers is substantially higher than the normal wage and puts them in the upper middle class. The country IS a lot cheaper than ours -- because we've been bogged down with tons of government regulation and having to pay for increasingly weighty government.

[Cronos]

IF they demanded the same wages and benefits that Americans were getting, the companies never would have relocated to India.

The wages they earn gives them the same lifestyle as someone earning 6 times as much in the US -- why? Because we've got to pay so much in taxes to keep a bloated government, we've got to pay so much in premiums because of greedy lawyers suing every company, increasing their legal costs, which they pass on to us.

[Jimmy Valentine]

Ho..Ho..Ho..

You are such a chump.

The laws may be in place. My point is, they don't give a damn for them.

I am content to wait and be proven correct.

Regards,

[Cronos]

You are such a chump. The laws may be in place. My point is, they don't give a damn for them.

Yawn, keep waiting. The laws are the laws. If they're in place in a functioning democracy then transgressors will be prosecuted.

[Bombay Bloke]

"Why? Because the Indians prostitute their skills out to those GREEDY AMERICAN CORPORATIONS for cheap wages"

I don't get why you're saying that Indians are prostituting themselves. The wages are not "cheap" - they're competitive within the Indian context. That's why graduates are keen to take these kinds of jobs, for a couple of years, anyway. The turnover is quite high because the jobs are so boring and the skills are not particularly transferable.

Why do you consider it "prostitution" for someone to sell their labour at a price they consider fair? It may cheaper than US labour - but that's globalisation. That's what we want, right?

"Unfortunately, many of the Indians CANNOT speak good English AND even those that can don*t have a good comprehension of English. It*s too difficult to talk to them. They don*t understand what you are asking them. I KNOW this for a fact. They have NO business working in customer service."

This is a wild generalisation and, frankly, untrue. The level of English varies in this country, but around 200 million people in India speak English, many of them excellently.

[Bombay Bloke]

"And, as a foreigner working in India, a socialist country, you will likely not receive the subsidies from the Indian government that Indian citizens doing the same work will recieve"

Er, what subsidies? I live in India, and I've never heard of any subsidies for call centre workers.

[Cronos]

So, Bombay bloke, with a call centre salary of say $200 a month, what can a guy buy on? Isn't it true that living in Bombay is expensive?

[dfwgator]

Pretty soon Indians will be whining when English-speaking African countries like Nigeria begin undercutting even the Indian rates.

[NRA2BFree]

I rest my case. LOL! You are a classic example of one who does not comprehend what I've been telling you. You are so hung up on believing that Indians and Americans are competing against each other for these jobs that you just don't "get it." Maybe India needs to revamp their English program to include further COMPREHENSION skills!

Anyway, I'm done with this thread. There's NO getting through to you. You just don't comprehend what I've been saying and I'm not going to waste any more time on it.

[NRA2BFree]

See post #44. That's your answer!

[AM2000]

You don't know what you're talking about, dude.

[Jimmy Valentine]

I have spent over thirty years in the banking business dealing with all sorts of people including the paragons of outsourcing.

Pleae do not hold your breath on this; you will wind up a most profound shade of blue.

Cynical, but sadly experienced regards,

[NRA2BFree]

You don't know what you're talking about, dude.

Wrong again! You're the one who doesn't know what you're talking about. I'm NOT a dude. LOL!

[AM2000]

Doesn't matter. You don't even understand how competition works in a globalized marketplace.

[537 Votes]

Why does it take white collars to get attention. We blue collars never get this much press.

You get the Super Bowl Beer Commercials.