In the controversy over outsourcing, the movement of jobs to India found an unlikely ally -- Thomas L Friedman, the legendary foreign affairs columnist of The New York Times. A three-time Pulitzer Prize winner for reporting from and commentary on the Middle East, Friedman visited India some months ago to see for himself what the fuss was about, and came back convinced that outsourcing wasn't as bad as it was being made out to be.

As he later told his audience at Pace University's Michael Schimmel Centre for the Arts in downtown Manhattan, "Outsourcing is the canary in the coal mine." Meaning: it is not the issue in itself, but just the first warning of a larger issue.

Of course, during his visit to India, he wrote a series about the emerging BPO industry, and made a documentary about it, The World Ate My Job. Later, he took a sabbatical to write The World Is Flat: A Brief History of the 21st Century and the Six Days That Flattened the Earth, a sequel of sorts to his prize-winning The Lexus and the Olive Tree.

His most recent stay in India, his second in two years, has reaffirmed Friedman's faith in some systems he has been an advocate of for years: globalisation, democracy, and education. Friedman spoke to Tanmaya Kumar Nanda from his Washington, DC, office on a range of issues, from outsourcing to India and globalization.

This interview first appeared in India Abroad, the oldest and largest circulated newspaper for the Indian-American community, owned by rediff.com

This was your second major trip to India in two years. What kind of changes did you see from last time?

More, better, bigger. More of everything. I have been to Delhi and Bangalore a couple of times; this time I was only in Bangalore, for my own reporting and to film a documentary for The New York Times and Discovery.

Is the film about outsourcing?

Not just outsourcing, but outsourcing from the Indian perspective. We are looking at India and outsourcing. We are not going to start with some software engineer in Silicon Valley who lost his job. It's really about India and it's called The World Ate My Job.

The last time you were there, did you have an inkling that outsourcing would become such a huge issue?

I wrote a little bit about it, of course, but I'm not sure I even used the term 'outsourcing' the first time I wrote about it. It was because it became a big issue [that] I decided I wanted to go back and take a look at it in greater detail. And that's what I found, I was incredibly impressed by what I found, simply by way of Indian companies positioning themselves to take advantage of this new world, and that's what I mean by more, better, bigger. More companies in Bangalore seem to be doing this better in a bigger way -- that was what I really found.

And it was so interesting to me what I found there that I asked for leave of absence to write a book about it.

What's the book about?

It [isn't] just about India, [it's] a continuation of The Lexus and the Olive Tree. And because really what I found was that – The Lexus and the Olive Tree made the following argument and this is a variation, an improvement, I would say: There are two big eras of globalization; first 1492 to WWI, and it's shrunk the world from Size Large to Size Medium, and I call that Globalization 1.0. From WWII to Y2K, we had Globalization 2.0 and that shrunk the world from Size Medium to Size Small. And that's where I left it, when I wrote The Lexus and the Olive Tree. And then I went off to cover 9/11.

While I was sleeping, we went into Globalization 3.0 and that's what I discovered in Bangalore. And it's shrinking the world from Size Small to Size Tiny, when being in Bangalore is like being next door.

The Lexus and the Olive Tree talked about two different value systems for countries – one that embraces technology and the other that stays rooted in traditional systems. Where does India fit in?

I'll tell you what I'm impressed with by India. India has its hardcore olive tree people, hardcore nationalists, some of them are in power now [referring to the BJP, which was ruling when Friedman visited Bangalore]. But here's what I feel: your success in globalization is really a function of your success at glocalization, your ability to take the best from the world's systems, best practices, best ideas, best brands, and meld them with your own culture in a balanced way so that you don't feel overwhelmed by them.

What impresses me about India is its ability, its innate ability, to glocalize. It's not so easy. But to take the very best practices of the world system, absorb them, and yet, you go to India and you feel you are in India! People are eating curry, daughters-in-law are living with their mothers-in-law, marriages are being arranged, and women are wearing saris! You know, you don't go there and feel -- at least I don't -- 'O God, globalization has really wiped out Indian culture!' Not at all. I feel Indian culture is extremely robust, has been able to absorb these things and find a kind of balance.

You have to work on that balance everyday and whether it will last through the next generation or not, what India has been doing for 5,000 years. The Mughals come, the Mughals go; the British come, the British go; but still, it feels like India. So India's found that balance between the Lexus and the olive tree pretty well now. But those who don't find the balance, you end up with the extremes.

That was the comparison you made between Infosys and Al Qaeda.

Right, that's what my column was about, Infosys and Al Qaeda. It's the two models, basically, of what happens because one is really trying to take the best of the world and trying to translate it at home in a very self-confident way. And the other basically is looking at Globalization 3.0 and saying, 'I cant do this, I don't even wanna do it, I don't even like what it's doing and I'm gonna destroy it.' So those who cannot create end up breaking, those who can't make will break, and that's the tension out there.

India is developing call centres and Saudi Arabia is developing madrassas. One is calling the world, in a perfect accent, the other is calling God, in only one language. And I like the India model, in case you haven't noticed [laughs].

South Asia is still a fairly unstable region in terms of global peace, with nuclear weapons. There's a buffer state, as it were, between India, where the call centres are, and Afghanistan, where the Taliban and Al Qaeda were based. Where would you place Pakistan in this framework?

Well, you know, I am a big believer that Pakistanis have the same DNA as Indians. There is absolutely no reason they couldn't be as brainy, or aren't as brainy, as anyone in Bangalore. To me, it's all about the system that you live in. Do you live in a system -- and Lord knows India is a flawed, at times even dysfunctional democracy, but it is a democracy. It is a messy, flawed free market, but it is a free market. It has a messy, flawed judicial system, but it does have the rule of law. And it does show you what happens when you can change management -- yes, Indira Gandhi can have an Emergency, but the system can purge a bad leader. And people have innovative ideas, the Azim Premjis, the Nandan Nilekanis can pursue them without the government getting too much in the way.

If Pakistan had the same system as India, I have absolutely no doubt Pakistan would be competing with India right now and it would have its own Infosys-es. But it doesn't have that system. Why it doesn't have that system is a long historical tale and I'm not going to go into that because people know it better than I do.

But to me, it's about the system. The book [I wrote recently] is The World Is Flat: A Brief History of the 21^st Century and the Six Days That Flattened the Earth. Suffice to say that what I learnt in Bangalore is what triggered the whole book. Holy mackerel, 500 years after Columbus sailed over the horizon to tell us the world was round, the world is being flattened, the playing field is being flattened. A group of Indian game designers like Dhruva -- who is featured in the Discovery-Times documentary -- bunch of 20-something kids, can compete in the game business using Google, Microsoft NetMeeting, and various computer-aided design programs, to do game designs all over the world. The world is being flattened. Knowledge centres anywhere in the world can compete, and that's like really cool. I think it's a great time for India, it's a great moment, but if you do it all right.

As the service sector grows in India, there's a growing backlash in the US about the 'giant sucking sound' from India, which surprises many Indian Americans because a large part of the jobs is going to China, whereas India's figures are much smaller. Also, a recent report pointed out that more jobs are outsourced into the US than out of it. Where do you see all this rage against India coming from?

First of all it's a function of a lagging economy. And when you have a recession, people are losing their jobs, people look for a scapegoat. What's new is that the people who are lagging are white-collar workers for the first time, in large numbers. Now what do we know about white-collar workers as opposed to blue-collar workers? One, they vote. And two, they know how to write op-ed pieces for The New York Times.

Now, there's a truism that says, 'People who are hurt by free trade know exactly who they are, and people who are benefited by it don't have a clue.' To someone who works in a factory that makes e-ticket machines, do they have any idea about what globalization means to them, nah, they don't think about it. 'I make the motherboard for some e-ticket machine.' They are not thinking that the e-ticket machine is actually replacing a desk person behind the American Airlines counter, and in India, and in London, and in Timbuktu.

So, we have a group of people who know exactly who they are, they can almost tell you, 'My job went there,' and it's not often you can do it. And so we are hearing from them in a time of recession when they are not naturally being reabsorbed somewhere else. I have enormous sympathy for these people. If I were one of them, you'd hear from me.

I want to make sure we have public policies and private policies to help these people as much as we possibly can to find another job, to find another good job.

I don't have the answers to that, that's why I'm writing a book, for one reason, I want to think this through in a coherent way. So that's why India is being singled out, basically.

But for all the chatter about it, it's one issue, but people move on. And now we have a jobs report out, 300,000 new jobs, one of the best months or weeks or whatever today, that will change the environment.

Some people have also started talking about potential social tensions that may arise if India's growth can't maintain a certain pace, given that there are 300 million educated youth out there.

That's just a problem of growth. You could just solve all your problems by staying poor and never getting in the game. I believe that there's so much opportunity to expand the pie and for India to move up the value chain basically that I just wouldn't be worrying about that now. That's a luxury to worry about it now.

India has some unique talents -- it has the IITs, it's a combination of IITs, a culture that really values education, particularly math and science, a large pool of English-speaking people, and a democracy, that's very important. Part of the system that we are in now, you have to choose development, and you can choose development.

It's like you have Alcoholics Anonymous, where the first thing you do when you go in is say, 'My name is Tom Friedman and I am an alcoholic.' Well, why is democracy important? We need Underdevelopment Anonymous, where countries could go, leaders could go, and say, 'Hi, my name is Egypt and I am underdeveloped.' Democracy is so important because you need its introspection – this is why freedom and liberation go together – you need freedom and introspection to see where you are in order to move ahead. 'My name is Egypt and I am underdeveloped.' And in a way India went through that. India said, 'My name is India and I am underdeveloped.' And Manmohan Singh, back in 1991, really made this opening, it was an opening at the top, what I call Reform Wholesale.

Now India is facing the next stage. As the world goes from 2.0 to 3.0 , from Size Small to Size Tiny, you have to go from Reform Wholesale to Reform Retail.

Retail is micro-refom: real judicial reform, real governance reform, real corporate reform, which is much harder because wholesale is from the top down, retail you do from the bottom up.

Do you get a sense of that? That reform is happening at the lower level?

It's happening, but it's very slow. The political system is so encrusted with corruption, communalisation, caste, criminalisation, all of these legacies, you don't overcome that in a month or week or year. That's the job of a generation. And the question I have, the question that's in my book, is: Did the world get so small so fast that it went faster than politics and human beings can adjust?

Let me give you an example. I went to Yale to see my daughter, but to get to New Haven from Washington, you have to go through Baltimore. I flew on Southwest, one of the most popular airlines in America -- it's cheap and you don't get any assigned seats. You get a ticket that says A, B or C (where boarding, seating, and luggage room are allotted in descending order). The trick to flying Southwest is to get there early, so I got to Baltimore and I'm like 'Hey, I'm a 20^th century guy, I'm Tom Friedman, I don't bother with the gate agent, I'll buy an e-ticket.' So I stick my credit card in and get a ticket and it says 'B'! 'Wait a minute, I'm 90 minutes ahead of time, how can I get a B?' So I go to the gate and I see some of the As turning in their tickets and they are crumpled pieces of paper -- they downloaded them at home!

OK, I thought, 'Tom, you are so 20^th century.' Here, Globalization 2.0 replaced the gate agent with an e-ticket; in Globalization 3.0 you become your own gate agent. So that's where we are going, that's faster than even I could adjust! The world's become flat, you can become your own gate agent, you can choose development, and the thing about India is a lot of people chose development -- they chose development. Wipro, Infosys, they didn't become great because the government came along and told them. They were like 'We can do this', especially when Y2K happened. The government was smart enough to get out of the way.

At the same time, that's good for wholesale, but you got to get to the next level, you need government.

You also wrote about two Indias, one that's built on private enterprise and the other public space.

They have got to merge it at some time, it's not socially sustainable, that people live in golden enclaves while poverty of the most wretched kind exists right outside their door.

Part II: 'India has to show more self confidence'

Image: Uday Kuckian