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."
The rapid growth of India's high-tech sector does worry executives around the world. Only this week Carly Fiorina, Hewlett-Packard's chief executive, warned of the growing threat posed by countries such as China, Russia and India to US dominance of the knowledge economy.
India has more than half a million IT professionals. A little more than 75,000 join every year. The starting salary of a software engineer in India is only US$3,000 a year. "There are individuals and companies worried about losing that lead on innovation -- that edge," Karnik says. "And much as I would like to see India gaining ground it is not about to overtake the West. We are world class in terms of the software development but there is little else which fundamentally challenges the richer countries."
Karnik's evangelism is easier to explain if you consider his background. After studying physics, he spent 20 years at India's Space Research Organization, where he was in charge of the world's first satellite broadcaster.
"We borrowed a satellite from America in 1975 and for a year used it to broadcast educational programs to poor farmers across India. I wanted to change the world in the 1960s and in India you did that by joining the government."
New opportunities
Karnik left to launch the television channel Discovery in South Asia.
"I started by working at home and when I left in 2001 we were in 20 million households."
For Karnik, India has learned about globalization the hard way. A little more than 15 years ago the country was a self-proclaimed economic isolationist. In 1991, it came close to running out of foreign exchange and the shock of bankruptcy saw it dismantle the tariffs and taxes that sheltered its faltering economy and embrace capitalism. The process was not easy.
"When we embarked on globalization -- frankly not by choice but because we were pretty much broke as a country -- we went through a lot of pain," says Karnik. "In getting loans from the international community we had to open up our economy and as a result a lot of people lost their jobs. It is not too dissimilar to Britain, where you had a major restructuring in the 1980s and now have the lowest unemployment rates in Europe. I do not know if every miner or steelworker has got another job but your economy continues to grow."
Once the Indian economy began shaking off socialism, it boomed. The latest figures show economic growth of 7 percent a year -- the second-fastest growing economy in the world -- and its foreign exchange reserves have sailed past US$100 billion.
Although technology is only a small part of the economy it has forced change upon the lumbering colossus of the Indian state, which has failed to build the roads and ports that connect other big economies to the rest of the world. But even here, Karnik remains optimistic.
"The huge advantage we have, and I always look for the silver lining, is in human resource. Whatever you do it takes at least 15 years to create a graduate. You cannot do it any quicker. But in terms of infrastructure, what took 10 years a decade ago can be done three or four years now thanks to new technology. We have seen this in telecoms," he says. "When I was boy it could take years to get a phone line, now it takes a day."
India is now the world's fastest growing telecom market, with more than 1.5m new mobile phone subscriptions sold each month. But Karnik believes companies face tough times ahead. First they will have to break out of India and buy foreign companies -- both to defuse political anger and understand foreign business cultures.
"Indians don't understand Europe. In France and Germany, we need to buy companies that are established there and know how to do business."
Also waiting in the shadows is China, a country Karnik has been visiting since the 1980s and which is the biggest threat to India's success.
Talent pool
"It is the only country with a similar large pool of talented people," he says. "We have the advantage of knowing English, because the British left the language here. Similarly the Japanese were in China for 50 years and have left their culture behind in the north-east, giving the Chinese a great advantage in east Asia."
Karnik is confident that India's software and services industry can meet the challenge.
"Our greatest resource are our people," he says, pointing to studies that show half the country's population is under the age of 25.
"In the next 20 years we will have a surplus of people of working age and most of the rest of the world -- America, China and Europe -- will have a deficit. Now countries cannot absorb millions of immigrants easily so it is easier to outsource the work instead."
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