The Telegraph
Since 1st March, 1999
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- How Indian brains play second fiddle to Western finance

Thanks to globalization, says The Times, “trainees at Indian call centres must learn the meaning of ‘slag’, ‘roger’ and ‘I’ll be buggered’ to deal with British customers”. The Americans hope to use a pending bill against jobs being sub-contracted to low-cost countries to drive an even harder bargain.

In the eye of the storm, India is, I fancy, a trifle smug. It’s the world’s “back office”, according to Goh Chok Tong. But all that means is that we are happy to sell ourselves cheap. As a New Delhi employee of McKinsey and Company, the New York-based consultants with an Indian chief executive, proudly told the International Herald Tribune, “There is no reason some guy in the US should be sitting in a warehouse keypunching data for $25 an hour when you can pay someone here to do it for much less.”

No wonder banks, airlines, insurance companies and health-insurers operate call centres in Delhi, Bombay, Bangalore and Hyderabad. The IT sector earns over three quarters of its revenue from exports, which touched $7.7 billion last year, more than 60 per cent from the United States of America. Exports are forecast to rise 24.6 per cent to $9.6 billion this year. General Electric and Microsoft have laboratories here. Bollywood provides music for Hollywood. A British Medical Association committee wants doctors and nurses in India to handle queries. Reuters is setting up centres in Bangalore and Hyderabad. Another 30,000 British financial and insurance sector jobs are likely to be transferred during the next five years. The world’s 100 top financial institutions count on saving $1.4 billion each from moving here.

Some pretend that this is a tribute to Indian efficiency, courtesy and mastery of English. They might even interpret George W. Bush’s defence of outsourcing as another feather in Atal Bihari Vajpayee’s cap for astutely forging a strategic partnership instead of a justification of his own policies in the run-up to the presidential election. Cost effectiveness does make sense, but are the benefits equal' A British estimate that outsourcing may earn India 17 billion pounds annually by 2008 does not mention how much it will save Britain or the US. As Bush says, cheaper production abroad “allows the US to devote its resources to more productive purposes.” That is also the rationale of dimly lit and poorly ventilated garments factories in Hong Kong whose products used to be sold — perhaps still are — for fancy prices in smart New York stores.

With their traditional global reach, the British understand this well. Which is why Patricia Hewitt, Britain’s trade and industry secretary, declared stoutly at the height of the furore over transferring call centres to India, “What’s good for India is good for Britain.” Far from being altruistic, she meant that lower costs would keep down prices, thereby making the product more competitive, stimulating demand and giving a fillip to exports. These would go up further if higher employment increases purchasing power in India, which already buys more from — than it sells to — Britain.

That old gibe about Britain being “a nation of shopkeepers” acknowledged the canny wisdom that lies at the heart of a global commercial network. Ohio Senator George Voinovich’s bill simplifies things. It forbids only federal outsourcing, which is a fraction of the total. Even so, it violates the General Agreement on Trade in Services, which is integral to the World Trade Organization by which the US swears. A complete stoppage would mean the extinction of a hallowed label like Levi Strauss, whose flag will be kept flying by China and Cambodia when the last North American factories close down next month. There is also a danger of the kind of ugly racism that prompted white American auto-workers in Detroit to brutally murder a Chinese colleague whom they mistook for Japanese when Japan’s motor industry was seen as a threat.

Nor will the bill stop disguised outsourcing in the land of the brave and the home of the free. When the Clinton administration relaxed H-IB visa rules to please hi-tech companies that sponsor skilled foreigners for visas and green cards, 47 per cent of the entrants were Indian and 9 per cent Chinese. “These firms of the new economy,” Norman Matloff, a computer science professor at California University, wrote in the Washington Post, “seem to be awfully fond of the old economy of 200 years ago — when indentured servitude was in vogue.” He regretted that “politicians on Capitol Hill do not want to know any of this as they are anxious to curry favour with the industry.” This was not new. US immigration policy is always tailored to specific domestic needs — whether Chinese labourers to build railways or Indian doctors for Lyndon Johnson’s Great Society. While IBM and Microsoft lobbied for more skilled men from abroad, American unions lobbied equally intensely to, in effect, keep down the wages of immigrant workers.

Many figures are cited to prove sweated labour at home and abroad. Whereas IT companies paid Indian immigrants a maximum of $35,000, a white American received at least $45,000 for the same work. Even then, Indians in India, of whom 40,000 were in the remote-service industry, threatened Indians in the US. McKinsey reckoned that the industry would grow at an annual 50 per cent to employ 700,000 Indians by 2008. Other Asians would also benefit for there is competition in cheapness. An accountant in the Philippines earns $3,600 against India’s $6,000, and $60,000 in the US. If Indian wages rise, call centres will move to cheaper societies.

Just follow the trail of Nike shoe manufacture from South Korea to Malaysia to Indonesia. Three Western banks — HSBC, Citibank and Standard Chartered — already have service centres in Shanghai and Guangzhou in China, and in Cyberjaya and Penang in Malaysia. No resting place is permanent, as remote-service industry managers, like compradors and overseers of old, seek relentlessly to keep down costs in a labour equivalent of dumping, far removed from the core standards paraded at Seattle.

The recent attempt by the US charge d’affaires, Robert Blake, to demand the quid pro quo of unlimited foreign investment in India’s financial services, insurance and telecom sectors was irrelevant. The Americans might as well set human rights targets for China or make military cooperation a condition for relocating jobs in the Philippines. They will not, because Bush himself admits that the US has much to gain from outsourcing. India gains only because of its poverty. We cannot afford to reject foreign commissions. An exchange rate of more than 84 rupees to the pound makes even the most measly British payment a windfall in “Shining India”.

That image is as deceptive as the earlier “Mera Bharat mahaan hai” slogan, both coined by slick admen at the behest of self-seeking politicians bent on gulling voters. Bharat has not been “mahaan” since the time of which A.L. Basham wrote. Today’s light can be blinding in smart shopping malls and glittering five-star hotels, but flickers out in vast areas of this benighted land that seem plunged in perpetual darkness. Conditions have not improved since Bill Clinton said to Vajpayee’s face that India produces 30 per cent of the world’s software engineers but accounts for 25 per cent of the world’s undernourished.

Yes, globalization is irreversible. It is also a good thing. But unless we handle negotiations with skill and determination, it will mean a permanently unequal relationship in which Indian brains play second fiddle to Western finance and organization. There is no question of gratitude as the poor scramble for crumbs from the table of the rich. Instead, they must insist on the crumbs being adequate. Yashwant Sinha has already responded with commendable firmness to Blake’s impertinence. That resolution must be maintained when Robert Zoellick, the US trade representative, visits India so that trainees who mutter “I’ll be buggered’ into Bri- tish and American ears are not themselves buggered.

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