Date: Thu, 13 Sep 2007 21:05:35 -0700 From: Norm Matloff To: Norm Matloff Subject: Clinton's Indian offshoring connections receive more and more scrutiny To: H-1B/L-1/offshoring e-newsletter Hillary Clinton is coming under increasing criticism for her relations to Indian-Americans who have close ties to offshoring. The enclosed article from the Washington Post of a few days ago is the latest salvo, going into a lot of depth, viewing things from the angle of the unions. The fact is, though, that Clinton will get away with it. She's adept enough politically to talk her way out of it, and her rivals in the Democratic primaries, as noted below, are not really railing against offshoring anyway. Indeed, though the article here mentions that Obama's campaign tried to pillory Hillary for her "senator from Punjab" joke, the rest of the story is that Clinton turned it around to her advantage, by making Obama look anti-Indian. Obama apologized. After the Post article, I've enclosed two articles by Anand Giridharadas, who has written several interesting pieces on this in the recent past. He (I believe Anand is a male name, so I'll use that pronoun) is the one who got the Indian minister of commerce to blurt out that H-1B is "the outsourcing visa." (See the article at http://heather.cs.ucdavis.edu/Archive/TheOutsourcingVisa.txt) Both articles give an interesting look at the the lobbying efforts by the Indian offshorers. Note especially the connection to the Brookings Institution. Note also this passage: # The Washington lobbyist said that a focus of the campaign was to collect # data on Indian companies’ investments in the US, and then to lobby # members of Congress from districts where those investments had created # jobs. TCS for example, may be funneling some San Francisco-area # technology jobs to India. But it belongs to an Indian conglomerate, # Tata Group, recently acquiring the Campton Place Hotel in San Francisco # and thus has hundreds of US workers on its payroll. This is interesting. One of the H-1B reform proposals is to disallow any firm from having more than 50% of its workforce consist of H-1Bs. If those hotel employees count, than that proposal becomes meaningless. (It is not an important proposal anyway, in my view.) Note this one too, reminiscent of the writings of my favorite charlatan, Tom Friedman: # For example, a lawmaker from Washington State might be told something # like this: Indian outsourcing companies may funnel some Seattle-area # technology jobs to India, but with the affluence that creates in India, # more and more Indians are flying. That has made India a huge buyer of # Boeing aircraft and thus a creator of jobs in the Seattle area, where # Boeing does much of its manufacturing. Even assuming that India does not eventually demand that the jets be built in India, what is this argument really saying? It's saying that with globalization we lose engineering and programming jobs in return for gaining manufacturing jobs. What a tradeoff! As I've said before, what globalization is really about is trading jobs requiring higher levels of education for those that use lesser education. Norm http://www.washingtonpost.com/wp-dyn/content/article/2007/09/07/AR2007090702780_pf.html Unions Press Clinton on Outsourcing Of U.S. Jobs By John Solomon and Matthew Mosk Washington Post Staff Writers Saturday, September 8, 2007; A01 When Sen. Hillary Rodham Clinton flew to New Delhi to meet with Indian business leaders in 2005, she offered a blunt assessment of the loss of American jobs across the Pacific. "There is no way to legislate against reality," she declared. "Outsourcing will continue. . . . We are not against all outsourcing; we are not in favor of putting up fences." Two years later, as a Democratic presidential hopeful, Clinton struck a different tone when she told students in New Hampshire that she hated "seeing U.S. telemarketing jobs done in remote locations far, far from our shores." The two speeches delivered continents apart highlight the delicate balance the senator from New York, a dedicated free-trader, is seeking to maintain as she courts two competing constituencies: wealthy Indian immigrants who have pledged to donate and raise as much as $5 million for her 2008 campaign and powerful American labor unions that are crucial to any Democratic primary victory. Despite aggressive courtship by Democratic candidates, major unions such as the AFL-CIO, the Teamsters and the Service Employees International Union have withheld their endorsements as they scrutinize the candidates' records and solicit views on a variety of issues. High on the agenda of union officials is an explanation of how each candidate will try to stem the loss of U.S. jobs, including large numbers in the service and technology sectors that are being taken over by cheap labor in India. During the vetting, some union leaders have found Clinton's record troubling. "The India issue is still something people are concerned about. Her financial relationships, her quotes -- they have both gotten attention," said Thea M. Lee, policy director for the AFL-CIO. Facing a cool reception, Clinton and her advisers have used closed-door meetings with labor leaders in recent months to explain her past ties to Indian companies, donors and policies. Aides have highlighted her efforts to retrain displaced workers and to end offshore tax breaks that reward companies that outsource jobs. But the Clinton camp has been pressed by labor leaders on her support for expanding temporary U.S. work visas that often go to Indians who get jobs in the United States, and it has been queried about the help she gave a major Indian company to gain a foothold in New York state. That company now outsources most of its work to India. "They're obviously defensive about it," observed Lee, who has taken part in such meetings. Clinton declined repeated requests for an interview about her views on outsourcing. Her campaign advisers, however, say she believes there are no inconsistencies in the comments she has made here and in India or in her actions as a senator. They say she opposes legislative measures -- such as trade barriers -- to slow the loss of American jobs if they would restrain free trade. And they say she has supported the expansion of the temporary-worker visas because U.S. technology companies have repeatedly told her the visas are needed to maintain a ready workforce. At the same time, they say, she has worked hard to secure money to assist workers who have lost jobs to outsourcing and wants to retrain the American workforce to compete better in the global marketplace. Clinton "believes that we must make sure that we are not allowing other countries to take advantage of American workers and that we do not have policies in place that actually promote outsourcing of American jobs," spokesman Philippe Reines said. Her rivals for the Democratic nomination have monitored her every comment on the issue. Last year, the India Abroad newspaper reported that she joked to a group of Indian American donors that she could easily win a Senate seat if she were running in the Indian state of Punjab. An aide to her chief foe in the Democratic contest, Sen. Barack Obama (Ill.), parodied those remarks in a document distributed to reporters; it listed her political affiliation as "D-Punjab." At a recent event in Los Angeles, host Nadadur Vardhan told those gathered that they should support Clinton because "she may shift more jobs to India," according to an Indian news account. Asked about the remarks, Vardhan told The Washington Post: "That's not our goal. Our goal is to support her because she is best for this country." Obama and former senator John Edwards (N.C.), who trail Clinton in the polls, have sought to attack her record on outsourcing while arguing that they support more direct government intervention to protect U.S. jobs. Clinton's camp counters that Obama and Edwards have acknowledged that some loss of American jobs is inevitable in a global economy. Edwards, for example, told a New Delhi conference in 2005 that outsourcing was "an economic reality" and "America must act to ensure that it stays strong and adapts . . . to ensure that the American people are better prepared to meet the challenges of the new world." And Obama said just two months ago: "We know that we can't put the forces of globalization back in the bottle. We cannot bring back every job that's been lost." When Clinton told a union-sponsored debate last month that the nation needed a "better approach" to globalization and trade, Edwards railed against the North American Free Trade Agreement that President Bill Clinton's administration signed in 1993, saying it compromised "millions of jobs." Obama chimed in that "people don't want a cheaper T-shirt if it's costing us jobs." Clinton recently pleaded with her allies in the Indian American community to press Indian companies to invest more in the United States in return for the jobs they have gained through outsourcing -- or risk a backlash. "If the United States continues to outsource jobs to India in increasingly large numbers, people will begin to feel insecure and may very well seek more protection against what they view as unfair competition," Clinton told Indian technologists during a July speech in Santa Clara, Calif. "America is not just a marketplace to get a foothold in. It's a place to make lasting investments that will create jobs and economic growth for everyone." Clinton's positioning on outsourcing dates to the 1990s, when her husband's administration aggressively pursued free trade agreements such as NAFTA that union workers today consider the start of a huge exodus of U.S. jobs to cheaper overseas competition. During the rise of the Internet, the Clinton administration also distributed temporary-worker visas to hundreds of thousands of Indians who came to the United States for jobs at high-tech companies. Both Clintons made repeated trips to India -- visits that continued during Hillary Clinton's tenure in the Senate. Between them, Bill and Hillary Clinton have made eight visits to India since 2001, and many more to Indian American groups in the United States. "Just look back," said Sanjay Puri, who heads the nation's largest Indian American fundraising committee. "The Clintons made a special effort. They went to India. They made a real attempt to reach out to Indian Americans at a time when no one else had done that." As Clinton pursued a Senate seat in 1999, the Indian American community stepped up its giving. Indian businessman Sant Singh Chatwal raised $500,000 for her in his Upper East Side penthouse, including $210,000 from 14 entities connected to him. Chatwal is now a finance co-chairman for Clinton's presidential campaign, and Clinton aides said they have counted more than $2 million in contributions raised at Indian American events. Some Indian American connections have benefited the Clintons personally, too. Vinod Gupta, the founder of a Nebraska data-mining firm, has donated more than $1 million to the Clintons' political causes while also paying the former president at least $3.3 million as a business consultant. Gupta hosted Bill Clinton at the dedication and groundbreaking of the two-story Hillary Rodham Clinton Mass Communication Center he is building on the campus of a women's technical school in rural India. The institution is designed to train India's workforce to better compete in the global marketplace. Among labor officials, a nagging question about Hillary Clinton's commitment to protecting U.S. jobs stems from a deal she helped broker for Tata Consulting, one of India's largest technology firms. In 2002, Clinton helped Tata land an agreement to open an office in New York state and to work with a Buffalo area university to create at least 100 jobs in the depressed community. But today, Tata employs just 10 workers at the New York training center while sending much of its work to its predominantly Indian workforce, which includes many on temporary U.S. visas. Tata is one of the largest users of the temporary-worker visas that have allowed U.S. technology companies to fill jobs with high-skilled, lower-paid Indian workers. It used nearly 8,000 such visas last year, according to a recent Senate report. As a senator, Clinton has repeatedly supported that program and backs raising the cap for annual visas from the current 65,000 to 115,000. Today, Clinton's office plays down the Tata deal that she once trumpeted. "Senator Clinton's priority has been to support local businesses and entrepreneurs in order to spur job creation and economic growth throughout New York state, and this is just one of the literally hundreds of cases where she did so," Reines said. Staff researchers Alice Crites and Madonna Lebling contributed to this report. http://www.deccanherald.com/Content/Aug272007/eb2007082621598.asp Deccan Herald » Economy & Business » Detailed Story Indian companies are learning the Washington lobbying game By Anand Giridharadas The US-India Political Action Committee has defended outsourcing vendors, most of whose employees are in India. In a sign of their changing approach, the Indian vendors are also imitating a tactic used against them in the last election: putting a human, and preferably American, face on the issue. In the heat of the 2004 US presidential race, John Kerry likened outsourcing to treason, Lou Dobbs harangued against it from his CNN anchor chair and the Indian outsourcing vendors were left scrambling. Engineers to the core, their leaders fired back with data-packed PowerPoint presentations. Outsourcing is good for the economy, they said; it increases efficiency; it creates more jobs than it costs. But in the eyes of Americans, those arguments proved no match for vivid tales of laid-off software engineers. “Telling someone who loses their job in North Carolina or Jacksonville that this is good for the economy doesn’t work,” said Phiroz Vandrevala, Executive VP, Tata Consultancy Services. Now as the 2008 US election starts to sizzle, the Indian outsourcing firms have returned to win Washington over as veritable insiders, slicker and better connected than ever. They have hired a former high official in the administration of President George W Bush as a lobbyist. They are humanising the issue by bringing Americans they have hired into meetings with politicians. Play politics They work with research firms like Brookings Institution to generate sympathetic research. They host cocktail hours on Capitol Hill. They have learned to play politics, urging members of Congress whose districts benefit from trade with India to support them on outsourcing. And most strikingly, they have mastered the Washington art of waging proxy battles through local front organisations, which spare them from appearing to be foreigners with an agenda. They provide facts, figures and arguments to trade groups like the IT Association of America and to Indian-American political groups. Then they watch those groups arrange for neutral voices to champion their causes in the newspapers. “The moment Nasscom says something, it is a vested interest,” said Lakshmi Narayanan, Chairman of Nasscom. “For last few months,” he said, Nasscom decided “to provide data, work behind scenes, but really to be fronted by local organisations.” The Indian companies are mounting this effort out of fear that the pressures of the US presidential election will induce candidates to lash out at Indian vendors. Their business model is a perpetual lightning rod: the companies carve out tasks from their American clients and perform them more cheaply back in India or other low-cost locations. Preparing resistence The Indian vendors’ main worries are the Democratic candidates Senator Barack Obama of Illinois, whose campaign has flirted with anti-outsourcing rhetoric, and John Edwards, a former North Carolina senator, who is running an explicitly populist campaign. The Indian executives believe that Senator Hillary Rodham Clinton of New York, also a Democrat, is more sympathetic to their cause, but they are concerned that she would be compelled to match the others’. “People are trying to make it an issue again,” said one Washington lobbyist who represents some Indian companies. But Indian vendors are working on their belief that outsourcing benefits both India and the US. Nasscom has hired as its chief Washington lobbyist Robert Blackwill, a former senior White House adviser and US ambassador to India in the Bush administration. As the President of Barbour Griffith & Rogers International, an arm of one of the most powerful lobby shops in Washington, located three blocks from the White House, he is a heavy hitter on Capitol Hill. Making a pitch Executives from the Indian firms visiting the US, including on a trip organised by Nasscom in May, have met with aides to all the major presidential hopefuls, Vandrevala said. Nasscom hosted an evening reception for members of the House of Representatives’ India caucus that drew 40 to 50 people, he added. But the heart of the Indian vendors’ new strategy appears like to remove themselves from the limelight. Outsourcing is not about us, goes the new Indian mantra to lawmakers: it benefits living, breathing Americans, including ones in your district. The Washington lobbyist said that a focus of the campaign was to collect data on Indian companies’ investments in the US, and then to lobby members of Congress from districts where those investments had created jobs. TCS for example, may be funneling some San Francisco-area technology jobs to India. But it belongs to an Indian conglomerate, Tata Group, recently acquiring the Campton Place Hotel in San Francisco and thus has hundreds of US workers on its payroll. Customers’ voice The Indians have also begun to use their own customers, which include the largest US companies, as proxy soldiers. Both the vendors and the clients belong to trade groups like the Information Technology Association of America, which help to coordinate lobbying campaigns in which an American chief executive will write a newspaper article or make a statement to Congress that is in his or her own company’s interest but also benefits the Indian vendor. “We don’t want to be seen as very active there, because it can seem that India is trying to poke its nose into the debate,” said Kiran Karnik, the President of Nasscom. “We would prefer that the active effort of working the Hill is done by US companies.”A successful example of getting a heavyweight to help their case, according to the Indian companies, was recent congressional testimony by Bill Gates, Microsoft’s Chairman, in which he called vigorously for expanding the H-1B skilled-worker visa program. Indian-American political groups in the United States are also effective proxies. The US-India Political Action Committee has defended outsourcing vendors, most of whose employees are in India. In a sign of their changing approach, the Indian vendors are also imitating a tactic used against them in the last election: putting a human, and preferably American, face on the issue. In meetings in Washington with members of Congress and with the presidential campaigns, the Indian companies are bringing in American employees they have hired locally. The employees typically serve as liaisons between the Indian firms’ American clients and their back-office workers in India, but to the Indians, they illustrate that outsourcing can create American jobs. New York Times September 4, 2007 Lobbying in U.S., Indian Firms Present an American Face By ANAND GIRIDHARADAS MUMBAI, India - In the heat of the 2004 presidential race in the United States, John Kerry compared outsourcing to treason, Lou Dobbs harangued against it on CNN and the Indian outsourcing vendors were left scrambling. Engineers to the core, their leaders fired back with data-packed PowerPoint presentations. Outsourcing is good for the economy, they said. It increases efficiency. It creates more jobs than it costs. But in the eyes of many Americans, those arguments proved no match for accounts of laid-off software engineers. "Telling someone who loses their job in North Carolina or Jacksonville that this is good for the economy doesn't work," said Phiroz A. Vandrevala, an executive vice president at Tata Consultancy Services, one of the largest Indian vendors, who serves as a Washington strategist for Tata and other Indian companies. But if four years is a lifetime in Washington, it is an eternity in Bangalore. And as the 2008 campaign starts to pick up speed, the Indian outsourcing companies have returned to Washington as veritable insiders, slicker and better connected than ever. They have hired a former official in the Bush administration as a lobbyist. They are humanizing the issue by bringing Americans they have hired into meetings with politicians. And, most striking, they have mastered the Washington art of waging proxy battles through local organizations, which allows them to not appear to be foreigners with an agenda. Lakshmi Narayanan, the chairman of the National Association of Software and Service Companies, which represents the Indian outsourcing industry, agreed that the approach was crucial. "The moment Nasscom says something, it is a vested interest," he said. So in the last few months, Mr. Narayanan said, the trade group has decided "to provide the data, work behind the scenes, but really to be fronted by the local organizations." The Indian companies are mounting this effort out of fear that the pressures of the presidential election, and of the Democratic primaries especially, will induce candidates to lash out at Indian vendors. Their business model is a perpetual lightning rod: the companies carve out tasks from their American clients and perform them more cheaply in India or other places with low costs for overhead and labor. The Indian vendors' main worries are two Democratic candidates: Senator Barack Obama of Illinois, whose campaign has hinted at opposition to outsourcing, and John Edwards, former senator of North Carolina, who is running a populist campaign. Many Indian executives consider Senator Hillary Rodham Clinton, Democrat of New York, more sympathetic to their industry, but they are concerned that she will be compelled to match the others' statements in a tight contest. The Democrats' new majorities in Congress were built in part on opposition to unpopular facets of free trade like outsourcing. For the Indian companies, a recent attempt in Congress to further restrict visas for skilled workers underscored that a storm is gathering. Some in Washington would like to make outsourcing an issue again, said one Washington lobbyist who represents some of the Indian companies and who asked not to be identified because of company rules. But if the movement against outsourcing is roused again, it will find itself jousting with a changed opponent. The Indian vendors have in no way strayed from their belief that outsourcing benefits both India and the United States. But they have found smoother ways to get the point across. The Indian trade group has hired as its chief Washington lobbyist Robert D. Blackwill, a former senior White House adviser who served as the ambassador to India for the Bush administration. As the president of Barbour Griffith & Rogers International, an arm of one of the most powerful lobby shops in Washington, he is a heavy hitter on Capitol Hill. Over the last year, Mr. Blackwill and the Indian companies' executives have met with staff members of more than 100 lawmakers, said the lobbyist who asked not to be identified. Mr. Vandrevala said executives from the Indian companies visiting the United States, including those on a trip organized by the Indian trade group in May, have met with aides to all the major presidential candidates, including Mrs. Clinton, Mr. Obama, the former New York mayor Rudolph W. Giuliani and Senator John McCain, Republican of Arizona. Several months ago, he said, the National Association of Software and Service Companies had an evening reception for members of the House's India caucus. It drew 40 to 50 people. But the core of the Indian vendors' new strategy appears to be removing themselves from the limelight. Outsourcing is not about us, goes the new pitch to lawmakers, it benefits Americans, including ones in your district. The Washington lobbyist who asked not to be identified said that a focus of the campaign was to collect data on Indian companies' investments in the United States and then to lobby members of Congress from districts where those investments have created jobs. For example, a lawmaker from Washington State might be told something like this: Indian outsourcing companies may funnel some Seattle-area technology jobs to India, but with the affluence that creates in India, more and more Indians are flying. That has made India a huge buyer of Boeing aircraft and thus a creator of jobs in the Seattle area, where Boeing does much of its manufacturing. Kiran Karnik, the president of the Indian trade group, said his organization has collaborated with research firms like the Brookings Institution and the Heritage Foundation. His group shares data on the outsourcing industry and provides access to Indian companies. It has also made what Mr. Karnik described as "symbolic" donations of about $10,000 to $15,000 to each of the major research organizations it works with. "Because we're able to give them a lot of data on information technology in India," he said, "maybe that enables someone to write a good paper on the global trade in services." The Indians have also begun to use their own customers, which include the largest United States companies, as proxy soldiers. The vendors and the clients belong to trade groups like the Information Technology Association of America, which help coordinate lobbying campaigns in which American chief executives write op-ed articles for newspapers or address Congress on topics that serve the American companies as well as the Indian vendors. "We don't want to be seen as very active there because it can seem that India is trying to poke its nose into the debate," Mr. Karnik said. "We would prefer that the active effort of working the Hill is done by U.S. companies." Indian-American political groups in the United States can also be effective proxies. The U.S.-India Political Action Committee has defended outsourcing vendors, most of whose employees are in India, although the group represents Indian-Americans. A profile of Mrs. Clinton on the group's Web site notes that "even though she was against outsourcing at the beginning of her political career, she has since changed her position." In an internal memo leaked in June, staff members from the Obama campaign contended that Mrs. Clinton's ties to wealthy Indian businesspeople had made her favor outsourcing. The memo cited the Clintons' ties to Vinod Gupta, an Indian entrepreneur who founded InfoUSA, one of the United States' largest brokers of information on consumers. Mr. Gupta, a major fund-raiser and benefactor for the Clintons who was nominated for ambassadorships by President Bill Clinton, was detailed in the Obama memo because his company outsources to India and he has vocally supported the practice. In a sign of their changing approach, the Indian vendors are also imitating a tactic used against them in the last election: putting a human, and preferably American, face on the issue. Tata Consultancy has, for example, brought its American communications director, Mike McCabe, into meetings with lawmakers' staffs and to a recent technology conference in Washington, according to an Indian executive who is familiar with the meetings and who asked not to be identified because of his organization's privacy rules. The executive said the objective was to remind politicians that Tata hires Americans. The Washington lobbyist who represents some of the Indian companies said that when the opposition paints outsourcing as bad for the United States, proponents can counter by making Americans the face of Indian companies.