No, this is globalization

One of the articles of faith these days is that free trade is a panacea for all sorts of evils. Proponents of free trade and the concomitant globalization argue that comparative advantage is key. That is, each country or region should produce what it can do better than anyone else. Others will buy this product, and in turn, sell things that they themselves have an advantage in making.

The fly in this ointment has always been the insistence of the developed nations that such capital flows were good and proper; but not similar labor flows. The reason, of course, is obvious: they do not want even skilled third world types crowding into their nice, well-ordered countries. Therefore, they arrived at a simple formula: exporting the dirty and dangerous jobs. Thus the maqiladoras on the U.S. Mexico border, the sweatshops in Southeast Asia, and the brutal gulag factories of China.

But then came the Internet. The Internet has made it possible to transfer highly paid and appealing service jobs to the rest of the world. With a good Internet connection, anybody anywhere in the world can offer his skills to the job market. It is possible for software developers in Bangalore to do the same thing: thus the flow of IT jobs, and an arbitrage opportunity that has been taken advantage of by a number of firms.

Similarly, the new area of IT-enabled services, including business process outsourcing (BPO) can result in a wholesale exodus of back-office work to less developed nations with lower costs, but trained human resources, such as India, the Philippines, much of Southeast Asia, Eastern Europe, etc.

As heartless as it sounds, this is simply the consequence of Adam Smith’s Invisible Hand: in the absence of market distortions, the more efficient producer wins. There is nothing wicked about all this: it is Economics 101. We are seeing the other side of this in the millions of unemployed Chinese peasants, driven off their farms by the super efficient American agri-business. We have been urged to be rational economic beings, and voila, companies are doing precisely that by going offshore to get a lot of services activity done.

It is a win-win for Indian companies and their U.S. customers to move more high-value-added services offshore: e.g. research, chip design, accounting, legal and medical research. This will reduce the costs for all concerned, and offer more scope for skilled employment in India. Those displaced U.S. workers will need to re-skill and retrain themselves just as the displaced manufacturing workers in the 1980s found their feet by adapting to market conditions.

Rajeev Srinivasan wrote this opinion from Bangalore, India.


Yes, there are unfair practices

It is important to recognize the difference between reality and perception. People perceived as “lead-players” in any field receive bouquets when the going is good, and brickbats when things go sour. The reality of the lead-player having little or no control is overlooked—if you take credit for the good, you are also responsible for the bad. When this phenomenon is applied to the IT field, it is easy to see why Indians are the villains.

Indians have always taken pride about their “driving” the IT industry. Informal conversations over chai and formal functions end the same way—a paean is sung to Vinod Khosla, Sabeer Bhatia et al; We reassure each other that IT and Indian-Americans are synonymous.

While there is nothing wrong with that, moderation should be the watchword. When people boast about their achievements with an “in-your-face” attitude, the effusiveness can be mistaken for arrogance, which is the easiest way of creating enemies.

So when Indian-Americans bragged about their collective and individual successes in the booming ’90s, the mainstream listened. Some out of politeness, others out of genuine admiration, and a few with an unstated “Who do these guys think they are?” attitude.

Now when the bubble burst, the last group was the first to draw daggers and hold our entrepreneurs responsible. “They ran the show and collected rewards,” went the logic. “How about taking responsibility for things going wrong?”

Since bad times beget bitterness, it was not before long that other disenchanted, jobless souls joined in finger pointing. Lo and behold, we’ve become villains, responsible for loss of jobs and the poor economy!

Juxtapose on the above the unwritten rules of desi businesses. When things go bad, the first rule is to go “Swadeshi”—dump the locals (perceived as demanding and less productive) and export Indians (willing to work long hours for low wages).

This helps businesses survive hard times; they also create adverse publicity. Boastful businessmen with sharp business practices are probably not liked; however, heartless monsters “robbing” people and replacing them with their own kith and kin are hated.

It is therefore no surprise that Indian-Americans have become whipping boys from being blue-eyed boys. Indeed such times shall prevail until the economy improves and the community matures enough to desist from ad-infinitum recitals of successes.

Yesterday’s heroes are today’s villains—such is the course of life. When Indian-Americans get to play heroes again, they should learn to be modest about achievements and refrain from practices synonymous with nepotism.

S. Gopikrishna writes from Toronto on India and Indians.