Outsourcing continues to haunt US lawmakers

With political parties in the United States gradually entering election mode, a top Obama Administration official has acknowledged that "outsourcing" could be one of the campaign issues, but unlike the past, the positive aspect is that trade with India is balanced.

"Outsourcing is always a hot button issue around elections, particularly when unemployment is high. People naturally take a look at these kinds of things," Assistant Secretary of State for South and Central Asia Robert Blake told Knowledge @ Wharton in an interview.

"But the point I would make about our economic relations with India is that they're increasingly balanced. The kind of offshoring... that is taking place, is an economic reality around the world now and all companies have plants in China and in India to basically be able to avail themselves of whatever the opportunities are in those countries.

"Every country has slightly different opportunities and advantages to offer," he said.

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So a big company like GE is going to have research centres all over the world to capitalise on and because of the Internet, they can bring all their scientists and engineers together in one big web and pool that knowledge and those ideas and to create something really interesting, he observed.

"That's what's happening. I think that that's the competitive edge that every company needs and that's true of India, too. India's doing exactly the same thing in reverse.

The Infosys' of the world and Tata and others are setting up their own centres in Iowa and Michigan and places like that," he said.

"That's the point I always make to American audiences... yes, some of this is happening, but this is part of keeping these companies in business and secondly, the Indians are doing the same in reverse.

"A lot of new Indian investment is coming in and the pace is quite dramatic. It's a 50 per cent increase every single year. So we're going to see a lot more of this coming over time. That's a very good thing for us," Blake said.

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Referring to tourism, he said one of the really interesting manifestations of the rise of the middle class in India has been that 650,000 Indians visited the United States last year.

"That itself represented a 20 per cent increase from the year before and they are now the 10th largest source of foreign travelers into the United States, which is a very good thing.

I expect that to rise as the middle class continues to grow in India, we'll see much more of that, and we very much welcome that.

And of course Americans for centuries have been going to India because it's such a lovely and glorious place to visit," Blake said.