The Telegraph
Since 1st March, 1999
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Yashwant flexes BPO muscles

New Delhi, Nov. 28: India today decided to do some plain speaking on the BPO (business process outsourcing) phenomenon that has raised hackles in the west with several multinationals moving call-centre jobs to cheaper locations in Asia.

“It is in the interest of the western world to know that we are cheaper and better. It is our strength. The world has to recognise it and deal with it. The economies who don’t take advantage of our strength will have to suffer. I hope such economies have the maturity to deal with it in their own larger interest,” said external affairs minister Yashwant Sinha at the fourth India-EU business summit jointly organised by the Ficci and CII.

India has been the biggest beneficiary of this avalanche of job losses in the US and UK with more than a quarter of the Fortune 500 companies shifting call-centre and related back-office operations to India.

According to a recent Boston Consulting Group study, India could have 30 million jobs in the BPO space by 2020 though this projection is contingent on a number of reforms in education and infrastructure that the country will have to make.

Within the EU, the UK has been hardest hit by the BPO trend and has lost over 10,000 jobs in the past year. The projections are that over 200,000 jobs in the UK could be at risk over the next five years — with a strong possibility that these positions could move to India.

However, India has been arguing that the shift in jobs could actually create a win-win situation for both India and the western nations as they would be able to ramp up the economy by taking advantage of cheaper end-product costs, and thereby go on to create more higher-end jobs there.

Stressing that India and the EU have to cement their ties in trade and investment, Sinha said there is a need to work hard on the economic front. “We have to achieve the target set by us in Copenhagen last year. We have to increase it from €25 billion to €35 billion by year 2005 and to €50 billion by 2008.”

The minister, however, cautioned that an increase in trade by a paltry 2.8 per cent was a major area of concern. “But the challenges are not insurmountable. We need to have a right mix of policies and attitude to meet this challenge,” he said.

Admitting that India faces a challenge in reducing tariffs which he felt was obviously high in comparison to world standards, Sinha said, “I would like to assure that we are on a glide path. We will ensure that we have a smooth and not a crash landing.”

Sinha also said that India does not look at the European Union merely as a group of nations but is aware of the fact that EU will become the largest entity with 10 new entrants into the Union next year.

Trying to present a positive image of India, he said, “I would like to urge to all that it is a different India you are dealing with. Please shed your old image of the country. Things have changed and will change further.”

Like Sinha, EU commissioner for external relations, Chris Patten, also decided to do some plain talking. “European exporters did not find trade in India easy. India has not completely shaken off the image that it is rather hard to do business here.”

He added, “There is a fear of excessive red tapism, poor infrastructure, inflexible labour laws and rigid foreign direct investment limitations”.

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