'BPO backlash may become political problem'

India must evolve a bold and effective strategy to deal with the opposition it is facing in the United States over the outsourcing issue as this could soon become a 'political problem,' outgoing US Ambassador to India Robert D Blackwill said in New Delhi on Thursday.

He was speaking on 'The Future of US-India Relations' at a luncheon hosted by the Confederation of Indian Industry.

"There is a sentiment in the United States about job loss (in case of increased outsourcing to India), but it is not substantial yet. This could well become a political problem and India must put in place a political strategy to deal with this situation," he said.

Blackwill's remarks follow close on the heels of a proposal in four US states to ban outsourcing of processing contracts to developing nations including India.

"For example, if India could say it is importing close to what it is exporting to the United States and convey that it is helping in creating jobs there, the task of people like me, who support the outsourcing activity, to convince people back there will become easier," Blackwill said.

"From what I can see right now, imports from the US into India are almost flat."

The proposed Bill, which seeks to ban outsourcing of government contracts to Asian companies, is being viewed by Indian IT industry as a latent restriction.

Among those considering the measure to curb flight of jobs in the US are New Jersey, Maryland, Connecticut and Washington.

The outgoing ambassador said he supported outsourcing arrangement himself because this led to 'cheaper goods and services' becoming available to the US citizens.

In his speech, he pointed out that India's large and talented labour pool made it possible for it to become yet another 'Asian miracle' and that the country had already shown its mettle through spectacular accomplishments in information technology and software.

"An India that tosses its licence raj and red tape into history's dustbin, would be ever more competitive in trade and international capital markets and that would bring increased American investment," he said.

"An India that takes full advantage of its extraordinary human capital to boost its economy would be a more effective strategic partner of the US in coming decades, including in promoting peace, prosperity, stability and freedom in Asia," he said.

"An India that enters into a full-fledged series of second-generation domestic economic reforms would inevitably play an increasingly influential role in international affairs," added Blackwill.

"In his book Diplomacy, Henry Kissinger writes that the international system of the Twenty-First Century 'will contain at least six major power centers - the United States, Europe, China, Japan, Russia, and probably India.' It is up to India to make sure that it remains on that list," said the outgoing ambassador.

Taking note of the ongoing economic reforms process, Blackwill noted that "an India that enters into a full-fledged series of second-generation domestic economic reforms, would inevitably play an increasingly influential role in international affairs across the board. That too would be beneficial for the United States."

Additional inputs: PTI