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Ashutosh Sheshabalaya On Indian Issues
Whose Myth the IT Boom
by Ashutosh Sheshabalaya

Response to November 2004  article in The Financial Times, London.
In “Myth of India’s outsourcing boom” (FT, November 16), Vijay Joshi leaves readers like myself puzzled as to why he chooses the term ‘myth’ to explain his hypothesis. Is there a myth about the boom, or one about outsourcing? Can I be excused for my confusion, given that the title suggests it may have been preferable to have no boom in India, rather than one led by outsourcing.

But then I might be blaming him unfairly, for Mr. Joshi does not deny there is a boom. In fact, he begins by accepting there has been a steady rise in national income, and that this has been happening for two decades, more or less in line with the birth and growth of India’s IT industry. After a longer spell of slumber when India made an epic success of redistributing poverty through anaemic economic growth, it is difficult to dispute that a boom (any boom), is a sine qua non for benefiting its population.

Myths are useful to explain the present by resorting to collective memories from the past, even one as unpleasant as the ‘license raj’. It is foolish to try to extrapolate myths to the future, without a serious look at the present. This is where Mr. Joshi runs seriously off track. He misses seeing the massive difference in accelerating the liftoff of a low-cost economy through the high-value services sector, and doing so on a global scale. As explained at length in my recent book Rising Elephant (Common Courage Press, 2004), new blue-collar jobs will inevitably follow India’s globally-competent services sector, and do so from a position of strength. In auto components, for example, India’s business process service strengths are enabling it to acquire a significant lead over traditional car manufacturing hubs. Toyota’s new Indian gearbox plant has become central to its plans to manufacture vehicles, for the first time using components sourced wholly from outside Japan. Mr. Joshi should wait and see, as a new 'blue-white' area of lean, flexible and small batch production emerges out of India, to complement China's bulk manufacturers in the continuing shakeout of the world economy. Such activity will be on a global scale, AND be employment intensive.

Meanwhile, as any resident of India today knows, better-paid tertiary jobs in a variety of places, ranging from telephone kiosks to courier services, are also being fuelled by outsourcing. Last year, a Boston Consulting Group vice-president estimated that India could “generate 30 million jobs” by 2020, simply as spin-offs from the outsourcing business.

The lack of a past model for such a service-led or ‘outsourcing boom’ is not India’s weakness; it represents a flaw in Mr. Joshi’s thesis, when he tries to reference the wholly-different Indian model to southeast Asia 's now-jaded economic wunderkinds.

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