Outsourcing to countries like India and China can benefit the UK economy by increasing jobs in the long term and improving the country's competitive advantage, British Prime Minister Tony Blair said.

Outsourcing and India: Complete Coverage

Blair's comments stand out in sharp contrast to some US politicians who say they are in favour of claming down on outsourcing to India, a populist move in an election year.

Blair, who was addressing merchant bankers Goldman Sachs in London on Monday said a recent report by McKinsey management consultants showed that outsourcing was not  "merely necessary for business to survive but can increase the provision of jobs, if the extra competitive advantage is properly used."

Blair also commented on what he described as "reasonably extensive" visits to India and China, which he said had left a profound impression on him.

"I remember sitting in a brand new state-of-the-art university complex in Bangalore in southern India, talking to leading biotech entrepreneurs, many of them women academics that had branched out into business, confidently predicting they would beat Europe hands-down in the biotech business within a few years," he told his audience.

"And they weren't alone.  India, as a whole now turns out 220,000 science and IT graduates every single year. When I returned home, people asked me about the poverty of the country, how shocking it was and so on. There is indeed still much poverty in a nation of 1 billion.  But what had shocked me was how fast it was changing."

He added, "Then last summer I visited China.  I had the same experience.  But I noticed something else.  Whereas ten years before on a visit, I had also seen new buildings in Shanghai, the same determination to get into the western way of business, but had found it a little like people wanting to learn a new language but not quite sure how to do it;

"This time, there was an assertiveness, again, as in India, a confidence that showed they were now not just speaking the language but doing so with a fluency and comfort equal to any first world nation.  More than that, a readiness to push it further, expand its possibilities, that stood in sharp contrast with what we see in parts of Europe."