But I believe the advice that Allan gives the US applies to India as well. If India is to remain as “the IT power” then it too needs to continuously innovate and move up the value chain. But the change has to be fast. It would not be a surprise that this force of globalization creates another entry of “new” workers into the world economy. There are other countries that stand outside the world economy and which can and will integrate into the world.
The challenge that India faces is not only from the world more developed than us but the challenge will be (rather is) equally fierce from the world that is catching up-the world that is China and India of yester years.
India does need to set its house in order. The parasites in the Indian tiger have to be weeded out. The corruption, lack of education, infrastructure bottle necks is just a few of them.
Yes what India had done is commendable but what lies ahead of India is a far greater challenge that we have to brace ourselves for !

Even if so, why will the spotlight fall on offshoring? Given this, this has minimal bearing on today\?s decisions ? be they policy or business.

My response- look at gdp data.US growth at 1.1%. Greenspan speaks of
recession. IT spending is a discretionary spending. JOB losses will
occur in this sector if economy goes into a recession.

Spotlight will be on offshoring because americans don’t want to
work on producing shoes, clothes and toys. They want to be in high tech jobs. so surely complains will arise in IT jobs that is
offshored

http://gregmankiw.blogspot.com/2006/05/outsourcing-redux.html

but what if us economy were to shrink??….unemployment were to rise to 8-10% in IT sector (or any offshored sector)…..this time around there is not dot.com.bust to blame…..the blame is going to be on Offshoring of job…..

My response: why do you think the US economy is going to shrink and that unemployment is going to rise to 10% in the IT sector?

Even if so, why will the spotlight fall on offshoring? Given this, this has minimal bearing on today\’s decisions — be they policy or business.

but what if us economy were to shrink??….unemployment were to rise to 8-10% in IT sector (or any offshored sector)…..this time around there is not dot.com.bust to blame…..the blame is going to be on Offshoring of job…..

and of course…..it may never happen…..if dollar was to depreciate another 30% wrt to indian rupee or chinese yuan (dollar has already depreciated by that amount in the last 4-5 years wrt to other currencies like EURO, AUD, GBP etc..)

Here are a few facts that should help put the entire offshoring issue in perspective, and hopefully ease some of Mr Blinder’s fears.

Fact #1: The labor force in the US (as of April 2007) is 152.6 million of which 145.8mm are fully employed [http://data.bls.gov/cgi-bin/surveymost]

Fact #2: The total labor force in India’s white-collar services export industry is approximately 1.6 million — this includes IT services, call centers, BPO, KPO, whatever you choose to call it (www.nasscom.org)

Since about 70% of these exports go to the Americas by dollar value, a reasonable guess is that 70% of the aforementioned 1.6 million are focusing on American clients ie, 1.1 million Indians are working for American clients. (If anyone has the exact numbers, please let me know)

In other words, even after a decade of torrid 40%+ growth, the number of service workers in the country that’s the chosen destination for over 80% of the offshore services workers is less than 1% of the American labor force. Hardly a cause for concern, one might think.

I\’ve long averred that the entire outsourcing/ offshoring issue was much ado about nothing. Sure, we\’ll have an occasional spike here and there, courtesy Lou Dobbs and the 2008 elections, but it will be minimal.

And IF there is anything more than a ripple, it\’ll only serve to accelerate the process [grin].

http://6ampacific.com/2007/03/31/offshore-backlash-redux/

Greg Mankiw and Brad DeLong have both responded to Blinder’s pov. The comments on their posts are pretty instructive.

right now with this free trade only the rich (also share holders) are raking the profits but common man is losing his job……outsourcing of manufacturing was ignored because service jobs grew and absorbed all the jobs lost………..but with US economy shrinking and offshoring increasing……..its going to become a political subject since now the common man is going to feel the pinch.

and i guess the answer is simple……USA will simply let its currency keep falling….leaving with no choice but for india/china/japan to make correction to their currency.