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India's Prime Minister Defends Outsourcing

Atal Bihari Vajpayee says sending jobs to his country eventually will create more jobs in the United States, not less.
NEW DELHI (AP) -- India's prime minister on Friday defended job outsourcing to India, saying that it would eventually create more employment in the United States, not less.

Prime Minister Atal Bihari Vajpayee's mention of what he called the "strange controversies" generated over the issue came days after remarks critical of India by U.S. Trade Representative Robert Zoellick over the outsourcing issue.

On Tuesday, Zoellick told the U.S. Senate Finance Committee that India has no right to oppose U.S. curbs on outsourcing because it maintains "one of the most closed economies in the world."

Outsourcing is the relocation of American jobs to lower-paid workers in different parts of the world. India has been one of the biggest winners of the process, which has created an outcry in the United States.

Seeking to cut costs, companies from the United States and other Western countries have hired about 170,000 workers in India over the past few years for jobs such as payroll accounting, telemarketing, and customer-support services. The figure is expected to reach 1.1 million by 2008, industry groups say.

"Outsourcing makes businesses more competitive, increasing their exports and their profits and placing more investment surpluses in their hands which can be deployed to make more jobs," Vajpayee said.

"The world has spent the last decade trying to make sensible economics prevail over the temptation for short-term political gains," he said in an address to business leaders and opinion makers.

India's government says the United States should not lecture New Delhi about opening its markets when it is trying to block outsourcing.

"The very process of liberalization, on which we have been lectured for so many years, has created competitive skills which are available for utilization by business everywhere," Vajpayee said. "Outsourcing is a natural consequence of this process."

Legislation awaiting presidential approval would prohibit government contractors from shifting work overseas.

Experts say the U.S. legislation would have little impact, since less than 2 percent of India's $10 billion annual software export revenue comes from government-related projects.

Still, the outsourcing issue is generating an image of India as a job-snatcher, especially in the United States.

"The Indians have absolutely no right to complain because they don't belong to the government procurement code in the World Trade Organization, which sets obligations for making procurement deals transparent," Zoellick said at the Senate hearing. "And, frankly, they're not that liberal on the services side."