Times of India: US vs u$: Lost in Translation?

By Vikas Singh

Who’s afraid of India’s backroom boys? While anti-outsourcing rhetoric may gather steam in the US, it’s a win-win situation all around. Sunday Times finds out who gains how much.

Vivek Wadhwa is frowning. An outspoken proponent of outsourcing, the chairman and founder of the North Carolina-based Relativity Technologies is used to criticism, even abuse. But it''s not every day your own son accuses you of immoral activity. "I’m paying through my nose to send him to one of the finest private schools in the US, and this is what I get. Maybe we should just outsource education to India as well, he quips.

Wadhwa''s 16-year-old, Tarun, isn't amused. "Outsourcing simply exploits cheap labour. Workers in America and overseas are losers. The clear winners are corporations which exploit them. I see this as a huge moral issue," he says. "The fact that there is so much unemployment in America is inexcusable. How can we send our work overseas when we can't provide employment for all of our own people?"

Vivek sighs: "He’s a microcosm of what’s going on in America. I meet thousands of young people like him ”bright, well-educated, and absolutely convinced that outsourcing is evil. Now that polls are round the corner and John Kerry''s going around calling CEOs who outsource traitors, outsourcing is getting demonised." We ask Tarun if he knows how many jobs have been lost in the US due to outsourcing. His response: "I''m not sure, but I guess it must be thousands."

Actually, the figure was 103,000 in 2000, according to Forrester Research. It sounds huge, but was barely 0.1% of all American jobs. By 2010, going by the most optimistic or pessimistic, depending on your point of view projection, about 1.6 million jobs are expected to shift offshore. During this period, the US Bureau of Labour Statistics expects 22 million new jobs to be created in business services, healthcare, social services, transportation, communication and nanotechnology.

Interestingly, a Nasscom-Evalueserve report shows slow population growth and an aging population will create a domestic labour shortfall of about 5.6 million workers in the US by 2010. If this is not met, the US economy could lose out on growth opportunities worth $2 trillion. By encouraging outsourcing, the US actually gains additional workers without having to provide social security or other benefits.

Still don''t believe outsourcing can be a win-win phenomenon? A McKinsey Global Institute study estimates the US economy gains $1.12 to $1.14 for every dollar of business services outsourced through cost savings and repatriation of profits, among other things.

Then there are indirect benefits. Listen to Lathika Pai, CEO, B2K Corp: "Outsourcing has become a highly politicised issue, but what''s not being publicised is that as a result we are the fastest growing market for their equipment ” computers, software licences, consumer goodies. For every dollar sent away, they earn in other segments."

Clearly, the faster the Indian economy grows, the better for US multinationals. And outsourcing is fuelling a boom. The industry is expected to create over 4 million jobs by 2008 — providing direct employment to 2 million people, and opening up another 2 million support jobs in training, food, security etc.

Mere figures don''t capture the way outsourcing has changed lives, and lifestyles. Take Srinivas M N, owner of Bangalore-based Sridhar Travels. "Four years ago, I worked in a travel agency. In 2002, I started my set-up with two vehicles. We started providing transport to 24/7, one of the first call centres. We now have 68 vehicles ”Sumos, Indicas, Ambassadors, vans — and the majority of services are for Transworks, a call centre. Every driver carries a mobile.

Ravi, director of Hyderabad shopping mall One Stores points out: Youngsters working in BPOs are rich and in search of a better lifestyle. This phenomenon will see Cyberabad developing malls which offer an international shopping experience. Retailers can expect growth of 10% to 15%."

Sunny Sarid, owner of two restro-bars in Gurgaon says: "Two years ago, there were only 10 restaurants in Gurgaon. Today, there are 45 restaurants and pubs within a 2-km radius and 60% of the patrons are from the BPO crowd who are majorly into eating out, pubbing and watching movies."

Given everything that''s at stake, should India be worried? Shakti Sagar, president, Hyderabad Software Exporters Association, doesn''t think so. “As long as Indian companies can provide flawless quality and economy support to US firms, it is most unlikely they will ban outsourcing to India."

Ajay Vij, VP of the Bangalore-based B2K Corp, is more circumspect. "Let''s wait till the Indian and US elections are over. As far as Plan B goes, we have started looking at other markets like UK."

The takeout? While the US and India may be getting lines crossed on the issue, cash counters still seem to be ringing for call centres. As for fears about the future, well, they seem to have been put on hold — for now.

(With inputs from Bonita Baruah, Delhi; Smitha Rao, Bangalore; Hyderabad Bureau)

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