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USA Bangalore-phobia-will-only-hurt-the-west


Apr 3, 2005
Rather than creating hurdles, America and Europe must thank Indian IT firms for coming to their rescue and increasing the productivity of their corporations, says Sanjiv Kataria.

The Indian information and communication technology (ICT) industry and Indian software professionals have earned global kudos for exceptional technical prowess, meticulous software development skills and quality processes for over two decades.

However, the highly regarded industry with its 3 million-plus software professionals, comes under attack every now and then from the very nations that save costs by outsourcing to India -- dubbing it a nation producing 'cyber coolies' to being 'Bangalored' (a term used when losing a job to an Indian outsourcing centre) and to being referred to as 'chop shops'.

The West's fear of losing jobs to any Indian software development centre not necessarily in the city of Bengaluru has given rise to another phrase: 'Bangalore phobia'.

The latest attack on the industry from US Senator Charles E Schumer (Democrat) from New York raised several eyebrows in India. To add insult to the injury, Indian software firms will have to bear an additional burden of $200-250 million in the form of H-1B and L1 visa fee hike.

By targetting Indian software firms and singling out an iconic firm like Infosys [Get Quote], the US senator missed the ingenuity of the Indian mind.

To dub the work being done by the Indian software professionals as low-tech is not only unfair but unwarranted. And to term the Indian IT services companies as 'chop shops' is a great disservice, especially when they have contributed to the development of American and European economies.

A recent Nasscom-Evaluserve study estimates that in 2009 the US and European companies saved $25 to $30 billion by outsourcing software development work to Indian companies.

The $140-billion Indian ICT industry forms not only one-tenth of India's GDP but has built substantial knowledge capital too. It has two big components -- the $78-billion IT industry and the $63-billion telecom industry, as per recent studies by Dataquest and Voice&Data.

Of the $78 billion generated by the IT industry, two-thirds come from export of IT services and one-third is contributed by the domestic IT sector. Within the IT services exports of $52.6 billion, exports to the United States form nearly three-fifth, and Europe adds up to nearly one-fifth.

Even those who started by offering body-shopping services to the American and European clients in the 1980s today operate at the top end of the value chain -- IT consulting and business transformation services.

So it is software development and maintenance services valued at $17 billion that is the biggest chunk of the software exports, while new high-end projects in the IT consulting and package implementation, software product development, telecom software and engineering services value more than $3 billion each.

India's strength lies in its extremely robust higher education system with strong focus on mathematical skills and English language, which is a result of a conscious investment made by the government in setting up institutions like the IITs, IISc, RECs, ISRO and BARC to gain technical self-sufficiency.

"Alumni of Indian government-funded engineering schools like IITs have created intellectual property for the US and strengthened their ability to offer a better standard for American citizens," said IDC India recently.

"The US lawmakers must recall that H1B/L1 visa regime was created as a legally sanctioned means to allow US firms to induct scarce skills to benefit the US economy," it states further.

Even if we were to empathise with the argument that the US economy needs to banish unemployment, these countries cannot overcome skill shortage in the long run.

The drastic drop in the enrolment of American students in the science and engineering programmes is an indicator that there is no quick fix the help grow the local talent pool in the software space.

Both America and Europe must thank the Indian software industry for coming to their rescue and increasing productivity of their major corporations.

The Western world has to realise that by adopting restrictive policies on free access to talent-based services, they can only hurt their own economy.

Moreover, they won't be able to top the list of countries vying for a limited pool of skilled professionals, and thus power their economies, in the absence of a reliable IT partner like India.

As for Indian software companies, the best advice comes from Infosys co-founder N R Narayana Murthy: 'They must continue to innovate and enhance their productivity so that the world looks up to the technical prowess of the Indian software sector.'



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1947-2014 (Archived)
Jun 17, 2004
The Western world has to realise that by adopting restrictive policies on free access to talent-based services, they can only hurt their own economy.
Reference:: Sikh Philosophy Network
Yes 100 percent Yes.
And convincing politicians to be leaders on this issue .... it could be a hopeless cause.

Tejwant Singh

Jun 30, 2004
Henderson, NV.
Well written article. The problem with US Senator Charles E Schumer (Democrat) and many other politicos who want to gain some fame is having a parochial and shortsighted mindset to say the least.

The question should be asked that why did the Republican Govt gave carte blanche to China so they could export almost everything to the US without any restrictions. Milliions of dollars of lead laden toys and costume jewellery were recalled and I am sure that China has reshipped them to other countries like India.

Bill Gates, about two years ago came in front of the congress commitees and urged them to eliminate the limit on H1 visas so that we could be more compatible. No one listened to him and he ended up opening the second biggest headquarters in Richmond BC, Canada which is a stone throw from Seattle, Microsoft's HQ.

Hiking up the prices of H1 Visa will eventually be transferred to the companies in the US who can not live without the infrastructure set up in India with its highly educated pool,unlike in any other country.

So, what US Senator Charles E Schumer (Democrat) did was to score some political points so that the Govt. could pay the states to keep the teachers, firefighters, etc. etc. from getting fired and as the GOPERS demanded that this bill should be paid for.

They found the way to penalise the H1 visas. Now, as the money starts raking in, they have to increase the limit for the H1 visas which would be eventually passed on to American companies doing business in India.

This is the reason, I am in favour of Cities and States in the US to be able to sell bonds rather than demanding from them to keep a balanced budget whereas the Federal Govt has no restrictions.

By selling their Bonds, the Cities and States will become more responsible in spending and they do not have to cut the basic services in which the most important service, the education from K to 12 suffers because School Districts are the first on the chopping block. This is the reason The US is way behind in the basic education as compared to the other countries.

How can the US expect to have highly trained and highly educated people who can help in boosting the economy when they can not give a good well rounded basic education to their populi?

To economise like this is a self defeating prophecy and it is making us dig a deeper hole. We have become a service Industry because we have exported all our manufacturing jobs abroad and if this trend continues, then the countries like India will take over this left over industry.

Then what would US do? This is the question the Politicos should indulge in in a more deeper manner and with the sense of urgency.

Tejwant Singh