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To the Western media, India has long been a country of snake charmers and naked fakirs. So it is not strange that any development here should be classified in the man-bites-dog category. The growth of the IT services sector was regarded with incredulity. The employees were dismissed as cyber-coolies and the business as body-shopping. The business process outsourcing (BPO) segment has met with a similar reaction.
Now comes another trend that the West finds difficult to swallow: the fact that Indian and Chinese companies will be large providers of jobs in their countries. According to the latest data available, about 5 million Americans take home paycheques from foreign companies. These companies have offices or factories located in America.
Today, most of these organisations are Europe-headquartered. But the Chinese and the Indians are coming. Lenovo took over the personal computer division of IBM and added a chunk of workers. Haier is setting up additional facilities at its South Carolina plant.
Indian companies have not made such high-profile investments or acquisitions. But they are very much there. According to a recent FICCI (Federation of Indian Chambers of Commerce & Industry) report, 306 acquisitions took place during January 2000 to July 2006. In 2005, there were 130 acquisitions. This tells only half the story: the size of the acquisitions is ever increasing.
The decibel level, particularly in the foreign press, is still low. This is because Indian companies have learnt lessons from the backlash against China’s efforts to buy Unocal or L.N. Mittal’s bid for Arcelor. Says the International Finance Corporation of the Tatas: “Buying small and staying under the radar is the strategy suggested by the Tata Group’s executives.”
But you can’t stay under the radar forever. One area in which the veil is being lifted fast is in the recruitment process in the IT arena. These columns have already written about the influx of summer trainees from US colleges to companies such as Infosys and Wipro. Many of them return to work in India.
According to the Boston Globe: “In a case of reverse offshoring, Indian tech companies are beefing up their staff by hiring Americans and foreigners to work in India.They are also opening offices around the world and recruiting local staff.”
The numbers are, of course, very small still. And one might well say that to spot a trend in this is making a mountain out of a molehill. Besides, some companies are going through overseas subsidiaries: For instance, Tata Consultancy Services has channelled its China investments through its Singapore subsidiary. Others, like Mittal Steel, have limited corporate links with India. The company has 2,24,286 employees (not including Arcelor). Very few of them think they are working for an Indian company (though it is very obvious they are working for an Indian employer).
When Japan was driving the world economy a few decades ago, they too went to the US on a shopping spree. But they made “trophy purchases” such as the Rockefeller Centre in New York or the Pebble Beach golf course in California. Indian and Chinese companies have been more low key.
Indians are also setting up greenfield projects in other countries. Today, they are mainly in the developing world. But they are increasingly being welcomed in the West also. What difference does it make whether you are working for a US multinational or an Indian one? Ultimately, both have to follow the law of the land.
Of course, when it comes to jobs, Americans are still scared of China and India (see box). But that will pass when they realise that those are the very countries that are offering them jobs.
OUTWARD BOUND
Where Americans feel their jobs will go (%)
China 54
India 38
Japan 22
Latin America 22
Europe 8
Jobs won’t go out of the US 8
Africa 4
All of these regions 4
Respondents were allowed more than one selection
Source: The Council for Excellence in Government; Global Markets Institutes, Goldman Sachs, 2006.
