Relations between the world's largest two democracies, the United States and India, have never been better, but a small cloud has appeared in these otherwise clear skies: outsourcing.
Even as President Bush and Prime Minister Atal Behari Vajpayee announced in January increased cooperation in civilian nuclear, space and high-technology areas, the election-year rhetoric in the U.S. was rife with talk of India luring jobs away from the U.S.
Is it really so? Are "profits- before-patriotism" American corporations conspiring with India to move jobs abroad, tempted by depressed wages for high-skilled workers? Not quite. (We're not talking here about "offshoring" companies in the Cayman Islands, which is usually a tax dodge, but about outsourcing of skilled jobs.)
It is undeniable that job growth in the U.S. has been poor and that jobs have gone abroad. At the same time, India's economic growth -- estimated to average more than 7% in the current fiscal year -- is creating millions of jobs there. But such broad comparisons mean little.
Most jobs going to India are in the high-technology and professional-services sector. Data released by the U.S. Bureau of Labor Statistics show, however, that U.S. job losses are taking place mainly in manufacturing and retail services.
In the professional and business sectors, U.S. employers added workers in the last quarter. Although jobs did shrink -- for many reasons, including a burst stock market bubble -- employment in computer and mathematical occupations has grown since June last year by more than 150,000. According to the Information Technologies Assn. of America, only about 2% of 10 million computer-related jobs have gone abroad.
In U.S. manufacturing, jobs have been declining, but they have been gradually doing so over two decades. Investments by U.S. companies in India's manufacturing are still quite modest. In India's fast-growing automobile sector, for instance, Japanese and South Korean firms are big players. American auto giants have a comparatively low profile.
As for the loss of jobs or lowering of labor standards in retail business here, Wal-Mart might offer more clues to that than India or China.
What about wages? Yes, Indian wages are low compared with U.S. wages. This is an important reason, apart from the highly qualified skills pool, why technology and knowledge-based services corporations have moved some of their operations to India.
