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11/5/2010
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India To Obama: Outsourcing Is A Win-Win

Concerned about rising U.S. protectionism, government officials on the subcontinent are hoping to sell the president on the benefits of increased trade.

Indian officials will look to convince President Obama—who begins a 10-day swing through Asia Friday and whose campaign included pledges to keep more jobs in the U.S.—that both the U.S. and India can prosper by increasing outsourcing and bilateral trade in general.

Ministers from Indian Prime Minister Manmohan Singh's cabinet will stress to their counterparts in the administration that they believe commercial ties between India and the U.S. are a two-way street that offers mutual benefits.

"The fact is that there is outward investment from India into the U.S. economy, which is creating jobs, which is something we would like to convey to President Obama and his delegation," said Indian foreign secretary Nirupama Rao, at a press conference Thursday.

Many Fortune 500 companies in recent years have outsourced tech and back office operations to India through service providers like Wipro, TCS, and Infosys. But the practice has become increasingly controversial of late as unemployment in the U.S. remains high and the economic recovery stutters. In September, Ohio officials banned the outsourcing of state contracts to offshore vendors.

But Indian officials will tell Obama and his delegation that the diaspora of Indian professionals with advanced skills in IT, business, and other high-demand areas to the U.S. has helped the American economy. They'll also note that many Indian service providers have established U.S. subsidiaries that hire American workers.

"Recent studies have shown that thousands of jobs have been created by our green field investments, by our active positions in the U.S. That's something we would definitely like to stress," said Rao.

Obama needs to walk a fine line on the outsourcing issue. If he opens the door to more U.S. jobs going overseas, he'll be seen as reneging on his campaign promises. But if he's too protectionist on the matter, he'll draw fire from a newly emboldened, pro-business Republican party that scored sweeping victories in Tuesday's midterm elections to gain control of the House.

Obama's trip to India will include a private dinner with Singh, where outsourcing and other bilateral and regional issues will be on the menu.

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