With both the US President George W Bush and Democrat candidate John Kerry seeing tangible benefits in outsourcing, the captains of Indian industry must have heaved a sigh of relief. There is no denying the fact that the outcry against outsourcing in the US is an election phenomenon.

What should be reassuring for industry is that the US Chamber of Commerce President and CEO, Thomas Donahue, is promoting outsourcing of jobs overseas to countries like India as a way to boost the economy and increase employment. Donahue has said that he believes exporting high-paid tech jobs to low-cost countries like India saves companies money to use and create new jobs for Americans.

Earlier, during his visit to India, he had said that fears about outsourcing were “misplaced”, and that he found little hard data to support claims of an impending exodus of US jobs overseas. Therefore, it can be safely assumed that the backlash against outsourcing is based on emotions, and in some cases, political agendas.

Outsourcing blues are unfounded. The labour unions in the US should be made to see the logic of the benefits of off shoring. They should be told that, from a marketing perspective, global outsourcing expands supply and distribution channels, product recognition and loyalty. It also expands market opportunities and supports greater choice. Only companies that look outward will grow.

One may recall what happened to the US automotive industry during the 1980s. "Made in Japan" became synonymous with low cost quality rather than inferior craftsmanship. To compete and survive, the U.S. automotive industry had to adapt. Nowadays, the automotive industry operates globally, exchanging ideas, technological components, and lessons learned. That industry is now sustainable and evolving, rather than succumbing to competition. Consumer choice is also broader due to this revolution. Automotive safety, economy, luxury, and general durability have improved. Global outsourcing and exchange have kept the US automotive industry viable.

On the contrary, the US steel industry is still facing a downturn because of its protectionist policies and continues to reel under stiff competition from cost-effective products entering the US market. This stark difference between the two sectors only goes to prove that protectionist measures are detrimental to the economy and the companies. People in the US should be smart enough to realize this or should be painted the right picture.

The bottom line for India is that it should tackle the BPO backlash with reason – sound reason.

The labour unions and the political establishment in the US should also note that outsourcing is good for the US economy in the long run. Take, for example, the IT industry in the US. Trade liberalization has led to a marked decline in the prices of computer equipment, which has resulted in significant savings for US business. Likewise, the boom in sale of IT products has resulted in increased demand for highly trained experts in computer science. Once technology filters down to the consumers and smaller businesses, the economy creates many new highly-skilled jobs.

In retrospect the backlash against outsourcing in the West has benefited India by creating greater awareness about its technical capabilities. The inherent strength in IT and low cost labour has turned India into a global services hub. However, to reap the benefits of outsourcing, India must be more open and modernize its market to stave off US (Congressional) action.

The backlash has also, apart from attracting global tech firms like IBM, HP, Accenture and EDS to open shop in India and capitalise on the available low-cost high quality talent pool, enabled Indian firms to bid for multi-million dollar deals with their competitive edge.

So, industry, relax! There is no immediate danger. However, the industry cannot be complacent. On its part, Indian companies should utilize experienced US consultants for onsite work. This would add value to Indian companies who make use of American’s customer business and applications knowledge. Indian firms can also hire and integrate US employees into their firms.

By taking these issues into account, Indian IT leaders can take firm steps to defuse the outsourcing backlash in the US. In return, it will require a genuine response from American politicians, companies, and IT workers themselves. With some effort on both sides, we can make this a reality.

Outsourcing is here to stay. The best way to beat the flak is to make the US public see reason and view globalisation as a win-win situation.