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Wednesday, August 11, 2004 - Page updated at 12:00 AM

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Q&A: High-tech booms in India

In this week's four-part series, reporter Brier Dudley traveled from Redmond to India to show how globalization is reshaping the Washington economy. Today he answered your questions.

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Thanks to all who participated.

I noticed that you never mentioned India's very unfair and restrictive trade policy. While they are happy to take American jobs, they are banning American products. China is totally different, China loves American products and if the administration would relax technology export restriction, China can import at least $100 billion MORE annually from the US. Now if you open up weapons and fighter planes export to China, China would run a HUGE trade deficit against the US. We are shooting ourselves in the foot.Newt Olsen, Los Angeles

B.D.: I tried not to take a side on whether anybody's trade policies are unfair, but you're right in pointing out that there is a lot of hypocrisy in trade policies. India is a sort of poster child for free trade, but it still has all sorts of restrictions in place. The U.S. also waves the free-trade flag, but has some funny policies about technology exports and agricultural imports.


The U.S. was the foremost country to push for globalization, and its people encouraged it because they benefitted by it. But now that they are seeing some downsides of it, they are opposing it, and it has taken on political colors, too. Globalization is a two-way street, and it benefits every country. While Microsoft may have a small presence in India in development, it still sells a large amount of software to Indians and the Indian government. Many Indians too feel that if they are a large market for some companies, those companies too should invest in that country. Manufacturing was outsourced to China, but now the Chinese market itself is so huge that no one can ignore it, and it is showing up on the U.S. companies' bottom line!Ravi, Redmond

B.D.: Thanks for the thoughtful comment. I've heard similar comments from economists, companies and trade groups. Trade clearly is a two-way street; the unresolved question is how much everyone benefits. One example that comes up a lot is the $30 DVD player from China. Consumers may be concerned about the effects of globalization and manufacturing job losses in the U.S., but they also want to get that $30 DVD player at Wal-Mart or Bartell's.


Get rid of unions. If they weren't so demanding, wage pressures wouldn't be so high and local firms would be able to keep hiring locally.D.L., Australia

B.D.: That's an interesting take. So far unions have been unable to get a foothold at Microsoft and most other tech companies. Now unions are playing a big role in the debate over outsourcing and globalization, and organizers have focused campaigns in Seattle and Silicon Valley that are reaching out to tech workers feeling insecure about their jobs.

Wage pressures are another question. The local tech union organizer has raised this lately, especially in regards to Microsoft. No doubt it's harder to demand a big salary when an employer has cheaper options.


Good coverage of IT development in India during the last 20 years. It is Seattle to Hyderabad. Why no comments about Pune city?Mathihalli Gururaja Rao, Bellevue

B.D.: Thank you. Pune would have been a great place to visit as well, but I only had time (and energy) for Mumbai, Bangalore and Hyderabad. Maybe next time I'll visit Pune. It's fascinating to see the various cities emerging as tech hubs. It's like watching what happened in Bellevue and Redmond in fast-forward.


It seems that companies like Microsoft, Hewlett-Packard, Cisco, General Electric and others are going to places like India not just for tech skills and outsourced work, but also to open new markets and get Indians and other foreign countries to buy our products. Did you see any evidence of this?Lewis McMurran, Federal Way

B.D.: Absolutely, you nailed it. Microsoft in particular is aggressively trying to expand the market for its products in developing countries and India. The company was quite forthright about this. It is simultaneously participating in and profiting from India's growing tech industry.


When is the talk of "globalization" and "multicultural diversity" going to be recognized for the smokescreen it is? This is about the corporate addiction to cheap labor. To call it anything else is to play into the hands of those that would see America as a Third World country populated by "scab" labor from all over the world.Terry and Mickey Morgan, Tukwila

B.D.: Your views are shared by a lot of people who fear the changes brought by globalization will hurt America in the long run. There are many different perspectives on this issue. The series was intended to look at this complicated issue from different angles. Frankly, it would have been a lot easier to write if I just said it was good or it was bad, but we tried hard not to take a stand one way or the other and just to give people more information so they can make up their own minds.


Did you feel that people like Kumar "wished" they were back in U.S.? Do they miss the lifestyles and opportunities the U.S. provided? Are these "returning Indians" looked at as failures to survive in U.S.?D.S., Seattle

B.D.: That's an interesting question. I asked the Kumars several times in India if they were homesick for Seattle. They said they missed friends and some things, but I think India was still a fresh experience. I think they don't have regrets about moving because they feel free to come back if they start missing the U.S. too much.

It's also an interesting question about the returning Indians. Across India there seems to be a lot of curiosity about Indians returning from abroad, who may still be referred to as NRIs or "Non Resident Indians." Part of the curiosity is because America is still seen as a land of opportunity.

Some members of the Kumar family were surprised when they decided to return, since they seemed to have "made it" in Seattle, but I don't think anybody thought of them as failures.


I think re-education is the key to solve the high unemployment rate of tech workers. Are there any government programs, i.e. education loans/grants, for these workers?Thuan Nguyen, Issaquah

That's a very timely question. The government has expanded programs for retraining people who lose jobs because of international trade shifts, but some argue that more needs to be done. It's a topic that has come up in the presidential campaign.

Another question is what the people will be trained to do. Critics of globalization ask whether people are being trained to do less lucrative work, or work that could be outsourced down the road.


Brier, your stories are excellent. They cover the issues like loss of jobs here. My suggestion would be to teach our students here software architecture, which will allow them to still work on these here and may be in India. Then tedious work could be done there, while conceptual software design could be done here. Microsoft is thinking along these lines.Prof. P. Jayachandran, Worcester, Mass.

B.D.: Thank you, I appreciate the nice comments. You're right — Microsoft is already farming out what it considers more mundane tasks, such as some testing, so it can focus more on the higher end of software development. But that shifts some jobs out of the company, and shifts some of them to India.

So far the scale of this shift is fairly small, according to Microsoft. In July, a spokeswoman told me that 4 percent of the company's research and development is being done outside the company, and 1 percent is being done overseas. The company also says that none of its core intellectual property development is being done outside the company.


Why isn't there another "Bill Gates" with equal talent in India?William Aiyadurai, Everett

B.D.: That's a good question. There may never be another person who hits the sweet spot as Bill Gates did. But there are a number of tech entrepreneurs in India, including some that are loosely referred to as being India's equivalent of Gates. They include executives leading Infosys (Mr. Narayana Murthy) and Wipro (Mr. Azim Premji). In India they seem to have a similarly high profile and influence.

Who knows? Perhaps the next "Bill Gates" may come from India — or China, Russia or Brazil.


When Microsoft says it has 1,000 employees in India it is lying. Companies like Wipro are set up by Microsoft India people who then outsource more of their work once over there. I believe there is the equivalent of 15,000 MS employees over there. What proof do you have in your article that this is not happening?John Holmes, Redmond

B.D.: You're probably right that indirectly Microsoft employs more than 1,000 in India, if you add in temporary workers and the people working on contracts at companies such as Infosys and Wipro. But I think it's much less than the equivalent of 15,000 Microsoft workers; that's about how many people the company has working on the next version of Windows.

As for the numbers of direct employees, I did what I could to verify them — I took their numbers, talked to employees and executives and went to the sites in India to see for myself what was happening.


Is India really going the way of Japan in the '70s and '80s? I mean, for all its IT success, it barely accounts for 1.4 percent of the world IT revenues. So is there significant scope for expansion, and if so what are the possible implications for America?Malolan Cadambi, Chicago

B.D.: That's an interesting question. After hearing all the hoopla about India eroding the U.S. tech industry I was surprised to find out what a small share of the IT industry India has so far. An Indian tech trade group expects a lot of growth — you can get its forecasts at www.nasscom.com — but still doesn't expect to supplant America's share. There are all sorts of implications for America; some are concerned that over time the country's leadership will erode because it may cultivate and attract fewer of the best and brightest. On the other hand, people all around the world still want to come to America to study, work and share in its prosperity.

Maybe that's why the potential threat of India's IT industry growth hasn't become a national obsession, like the concerns about Japan's industrial might were in the 1980s. However, that earlier perceived threat also pushed the U.S. to boost science and math education, and corporations adjusted their business practices to better compete, and then we had a surge of growth in the 1990s.


Which are the Indian companies that Microsoft is working with? Do these Indian companies source/hire part of their team from Microsoft?Eric Burns, Redmond

B.D.: Microsoft has contracts with India's four largest tech companies — Infosys, Tata, Satyam and Wipro — to develop applications, do testing and other work. Some of these contracts were leaked to a local labor group, WashTech, which has posted them on its Web site. You can get more details from a story I wrote about that on July 29.

I doubt those companies hire Microsoft employees to do the contracts, although sometimes they hire former Microsoft people to work on the projects and land new contracts.

Microsoft is also reaching out to as many Indian tech companies as it can, to get its software into their hands, as part of its effort to propagate its Windows and .NET platforms.


Instead of having American flags on our cars, we should have an Indian and Chinese flag stating that we are proud to be multinationals and "give up your antiquated notion of being American."hpv45, Issaquah

B.D.: When I lived in Yakima there were a lot of immigrants from Mexico who put flags from Mexico on their cars, and there are plenty of Italian Americans and Irish Americans with flags of their home countries. I'm not trying to be politically correct, but America has always been full of multinationals. The Indian immigrants I interviewed were all very proud to be Americans and were grateful for the opportunities the country gave them.


We are seeing manufacturing and computer jobs going overseas. When all the workers here are not employed, who do they think is going to pay for these goods and services, and who is going to pay the taxes to support the government services and the military?Mark Wickersham, Renton

B.D.: Critics of globalization fear that's where the search for lower and and lower production costs will lead the U.S. I guess what we really have to watch, as the economy picks up again, is the degree of change — so far not all manufacturing and computer jobs are going overseas.


Do you think more American citizens would be willing to take the immigrant experience and work out of India / other countries (and possibly at lower salaries). I believe that the ones who take the risk would be at the forefront of taking advantage of a globalized knowledge economy. What is your view?John Peter, Bellevue

Brier Dudley: Great question. This is happening already, apparently. Infosys recently hired a U.S. student who had done an internship in Bangalore and decided after graduating to take a full-time job there. When they told me about him, I was crossing my fingers hoping he was from Seattle because it would have been a great sidebar for my series, but he wasn't. I believe he was from California.

Rajiv Kumar has also had inquiries from non-Indian Microsoft employees interested in working at the Hyderabad center, and a U.S. native researcher the company hired recently opted to work at the Beijing lab. So it's going both ways, and some people with a sense of adventure are trying to catch that wave.

Copyright © 2004 The Seattle Times Company

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