Date: Tue, 5 Oct 2004 22:48:33 -0700 From: Norm Matloff To: Norm Matloff Subject: Indian immigrants boost U.S. offshoring to India To: H-1B/L-1/offshoring e-newsletter One of the issues in The Great Immigration Debate is assimilation. The restrictionists (a term referring to those who want lower levels of yearly immigration) cite problems like jobs, usage of government services, environmental issues and so on. Many of those who support a generous immigration policy say, no, all these problems will sort themselves out as long as the immigrants assimilate. Some of the restrictionists reply that maybe the immigrants won't assimilate, if their numbers are high enough. I've always tried to point out that assimilation, and going a step further, patriotism, is not a dichotomous variable. On the one hand, I've seen immigrants who proudly stated that they do NOT consider themselves Americans--but who I sometimes catch describing the U.S. using the term "we." On the other hand, even those who do consider themselves Americans understandably cannot cut off emotional ties to the lands of their birth. It is in this spirit that I have claimed in previous postings to this e-newsletter that a number of Indian immigrants in the U.S. are promoting offshoring to India and hiring Indian H-1Bs. Again, it is understandable, especially since IT is the one piece of good economic news in Indian history. Nevetheless, it is equally understandable that the non-Indian portion of the American populace, including both natives and non-Indian immigrants, demand that the Indian immigrants' primary loyalty be to the U.S. The enclosed article is the first one, to my knowledge, to discuss this issue. Of course, given that the article appeared in the Indian press, the point of view taken is one of pride that the the "NRIs" (non-resident Indians, i.e. Indian emigrants) are promoting the mother country--as opposed to my theme here, which is less positive. But the point is that the article is confirmation of what I have been discussing, i.e. that many Indian entrepreneurs tend to hire Indian H-1Bs and want to offshore to India, that some non-entrepreneurial Indians are pushing their employers to do the same, that Indian venture capitalists are pushing their fundees to offshore to India and so on. Here we see some common themes I've been noting, such as the effort to develop the Indian "brand." Recall the Indian PR campaign for what they called "Brand IIT," which I speculated was a general promotion of the Indian tech industry, rather than just a promotion of IIT. Also note again the role of the American Association of Physicians from India, which apparently was the organization that got 60 Minutes to run the puff piece on IIT. Once again, the Indian press proves to be a rich resource for H-1B/offshoring analysists. Norm http://www.ciol.com/content/news/2004/104100506.asp NRIs boost outsourcing to India A study reveals that a rise in organized networking and mentoring by Indian tech entrepreneurs has led to increased outsourcing to India. Tuesday, October 05, 2004 GURGAON: While other low-cost destinations are slowly catching up with India in the outsourcing arena, the country will retain its edge due to the growing influence and expertise of the Indian Diaspora, especially in the USA, Canada and the UK. This is primarily on account of the rise in organized networking and mentoring that the Diaspora community can provide to businesses engaged in outsourcing. This was the finding of a study conducted by Evalueserve and World Bank Institute. According to the study, by the 1990s, many Indian engineers, who had started moving to the US in the 1960s, had either become entrepreneurs, venture capitalists, or senior executives in large and medium-sized companies. Many of these professionals started their own companies in India (e.g., Techspan, Cognizant, Mphasis), while others convinced their companies to hire Indian IT professionals. This provided more visibility to the Indian talent pool and resulted in the strengthening of the Diaspora. Riding the wave of this growing reputation in the IT sector, many well-placed senior executives in big corporations influenced outsourcing related decisions in India's favour. Some of these relationships quickly matured, leading to the formation of non-profit associations such as The Indus Entrepreneurs (TiE) and Silicon India Professional Association (SIPA), which further fuelled the networking within the Diaspora. Apart from providing the required capital (through investments), the Indian Diaspora is expected to increasingly play a crucial role in the gradual emergence of India's high-end knowledge services sector. First, it is expected that the Diaspora will provide more organized platforms for the sharing of knowledge and best practices. Next, the Diaspora is expected to increase the brand equity of the Indian industry, but without giving a semblance of bias for their home country over other low-wage destinations. Additionally, some VCs in the US, particularly those of Indian origin are actively funding Indian companies that have back-end operations in India, so that they can save on research and development costs. It is estimated that over 150 start-ups in the US already have some form of back-end in India (as of March 2004) and this number is likely to double by March 2006. Finally, several networking organizations like TiE (The Indus Entrepreneur), AAPI (American Association of Physicians from India), AAHOA (American Asian Hotel Owners' Association), AACSA (American Asian Convenient Stores Association) are helping the Indian Diaspora and the entrepreneur community in India to bond stronger.