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Sun, Jan 11, 2004 - Page 12 News List

Forbes face of the year ready to push India into the spotlight

IT trade union' in the West are terrified of the trend toward the Indian `back office,' but if Kiran Karnik has his way then other business sectors will be targeted


It would be hard to pick out Forbes's face of the year from any line-up of the global business community. Kiran Karnik, a thin, wiry 57-year-old, pads around his office in a brown jumper and slacks talking in paragraphs rather than sentences. To his detractors, every time he speaks a few more jobs are silently sucked from Western economies.

Karnik is the president of India's National Association of Software and Service Companies, NASSCOM, and the voice of the country's information technology industry.

NASSCOM's brief is to promote India's high-tech wizardry to the rest of the world, and to lobby its own government to create a business-friendly environment. By any measure, NASSCOM has been a phenomenal success: It seems every day sees another blue chip company announcing plans to outsource their operations. In the past few weeks IBM, Barclays and Aviva have all said they will be uprooting thousands of jobs from the west and planting them on Indian soil.

The trend should not be a surprise. Companies are under intense pressure to reduce costs, and countries such as India have large, well-educated, English-speaking workforces far cheaper than those of the west. For Karnik, the transfer of employment from West to East is a "win win" situation.

"I know it is easy to say but now we have actual data which shows that for every dollar outsourced the value created is US$1.45145, of which US$1.12 flows back to the US and a smaller benefit of just US$0.33 accrues to India," he says.

Unfortunately for Karnik, the political anger has not been easily dissipated by hard economics. In Britain, unions have threatened to strike over the disappearance of call-center jobs. In America, "offshoring" has become a hot political issue.

Important ally

Luckily, Karnik has found an ally in British Prime Minister Tony Blair. When asked last month about an insurance company's decision to move thousands of call-center jobs to India, the prime minister replied with a staunch defense of globalization: "We live in an economy today which is global, in which there is going to be a lot of changing of jobs, in which the concept of nine-to-five jobs is changing and has already changed."

"I greatly respect the fact that Tony Blair has stood up and spoken out about this," says Karnik. "In the US that is not happening and this is a concern because it is our biggest market. I have not seen any ranking American politician do the same and say `we can't avoid this if we want our companies to be competitive.' But despite all the talk, there has been no effective legislation that worries us."

Some predict that the trickle will become a flood. The service sectors that dominate the British and American economies will be hit hard. As many as 400,000 US jobs have shifted abroad and studies suggest 3 million may disappear by 2015. Most have so far been in call centers and back-office operations, but an ever-increasing number are high value jobs -- such as equity analysts and legal researchers.

"McKinsey really started this," says Karnik. "They used to just get bright MBAs here to do Internet searches but these guys were so good that now they are used not only to get the raw material, but they process it, do the analysis and then send it off to the HQ, where a consultant just reads it and signs it off. I think that it could happen, too, in other fields such as law and architecture."

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