In our continuing coverage of the Backlash against outsourcing, we look behind the scenes—at issues more fundamental to nations than a few IT jobs lost. At how Indian IT pros are only a fraction of all Indians abroad. And how all Indians abroad are just a fraction of the immigrants that flock to the US, Europe and Australia. The Backlash isn’t about a few H1B visas (for Part I, see Dataquest’s 28 Feb 2003 issue). It’s about immigration—and about the new services economy—where people are more mobile than goods. It’s about a new world in the making—and the churn that goes with it

Imagine this:
One in every 10 people you see, meet on the street or work with, is a foreigner.
That one of these foreigners—Arab, Bangladeshi, Malaysian—got your job and moved into a plush new house while you were fired with a wife and two kids to support.
That he got your job because he agreed to work for one-fourth your salary.
That there are a 100 million like him in India, all willing to work at quarter wages…….

Now imagine your reaction...

Man doesn’t live by bread alone," Victor Hugo once said in con text of the French Revolution. It was in many ways one of the most profound statements ever made on politics, popular sentiment and economics. Often, what drives popular sentiment and, therefore, politics and legislation has little to do with the dictates of rational economy. There’s a lesson that every political party learns at the birth of its career—emotion is a more potent force than reason, prception more powerful than reality... the short-term a greater driving force than the long-term.

And  that is a fundamental error Indian IT services companies are making as they survey—slightly bewildered—the growing resistance to outsourcing across Europe, the US and Australia. They look at the numbers and say "but we are so few—we can’t conceivably be a threat to local jobs". When Dataquest did its last story on this growing Backlash, the more forward-looking companies believed that countries like the US, for instance, "are inherently liberal"... and that "the economics of outsourcing are too alluring to be resisted".

But it isn’t about how many people a single company has in any country—i-Flex had only 20 in Netherlands when its CEO was arrested for allegedly encouraging illegal immigration. It isn’t even about how many Indians there are in a country—Indians form only 3% of the entire immigrant stock in the US, but are the center of the Backlash debate.

It isn’t even about whether a people are inherently liberal.

Many American readers wrote back to us on the Backlash story, arguing that Americans weren’t racist...that the Backlash to outsourcing wasn’t about race and color. They were right—most Americans aren’t. The American nation has been built on the idea of immigration. But here’s another fundamental truth of political debate—it isn’t always the moderates who set the agenda.

But that’s going ahead of ourselves. The fundamental misjudgment by the IT services sec-tor is the belief that because they are such a small pie of the big IT spend, they aren’t big enough to be seen as a threat... That the whole issue is really about competitive billing rates... That politics is irrelevant, the fringe far right even more so... That economic decisions are made in isolation of popular politics.

The Indian IT services sector may account for only a few billion dollars of outsourcing revenues. Sure, there may be only a few tens of thousands Indian IT professionals abroad on work visas. But these IT professionals have to be seen in context of the total number of Indians abroad. And that has to be seen in context of largescale immigration that most of the developed world now faces.

It isn’t really about 20 i-Flex employees. Or a total of 8,265 Indians working in the Netherlands.

It isn’t about 60 employees of Infosys Technologies in Australia. Nor about a total of 100,000 Indians in that country.

It is about the fact that one of every 10 people living on Dutch or US or UK soil today is a foreigner. It is about the fact that one in every four people in Australia today is foreign-born.

And it is about what this scale of immigration does to local sentiment, politics and perceived economic ills.

The world’s a sieve
Immigration isn’t a new phenomenon. There are entire nations made up of immigrant communities—the US and Australia being prime examples. But some things are different now—its scale for one, and its nature, for another.

Prior to the 1850s, the US imported a large number of immigrants as contract laborers to work in mines and railroads. Most of the Western world imported people during the severe labor shortages after World War II. Some permanently—like the United Kingdom. Some as temporary, contract laborers—like Germany. Australia had a total of 7.6 million people in 1947, of which only 2.7% were not of Anglo-Celtic origins. Post-war reconstruction required a lot more people and it set itself a target of adding an equivalent of 1% of its population every year. Few exceptions notwithstanding, that was the essence of it—low-cost, end-of-the-food-chain jobs that governments wanted immigrant labor for.

It’s only during the last few decades that both the scale and nature of immigration has changed.

The scale
By the end of last year, 10% of the population in the United States, or 28.4 million people, were foreign-born—a historical high. Add illegal immigrants and estimates are that about 33 million people on US soil today are foreign-born (11% of the total population). Of these, they account for 13.5% of the working-age population—with a similar representation in the actual workforce.

In the United Kingdom, 8% of the of the total population—or 4.8 million people—were foreign-born legal immigrants in 2001. France, Germany and the Netherlands have similar proportions. In Australia, the Migration Policy Institute estimates that by 2000, "over 40% of the population was either foreign-born themselves (23.6%) or had a foreign-born parent (19%)".

There’s no dependable count of the high number of illegal immigrants in these countries.

By themselves, the numbers are mind-boggling. For perspective—India, with a population of over one billion, is struggling with a less than 2% influx of Bangladeshi immigrants on the Assam border. The government is in a tussle with Bangladeshi authorities, complaining of job losses, crime, security and national identity issues. And it is threatening deportation.

The nature
Most of Europe, the US and Australia have, at different points of time, tried to restrict immigration by origin. The "White Australia" Policy; the National Origins Act of 1924 in the US; the Immigration Acts of 1962 and 1971 in the UK—all were attempts to get what countries believed were "desired" immigrants. That changed late last century—for numerous reasons.

British immigrants alone could not fill the labor shortage in Australia, for instance. Political upheavals around the world prompted the UK, Australia and the US to open up their gates to asylum-seekers. More recently, countries have looked at "skill-based immigrants"—the US being among the first to do so in 1952 when it first introduced the H1 visa.

In UK, even today, EU countries account for a more than 40% of the foreign workforce (the primary reason being that under EU law, people of EU origin have a right to residency in the UK), followed by India (estimated at 141,000), America (61,000), Australia (54,000) and West Africa. Elsewhere, the picture has changed. The dominant migrant community in Germany is still the Turks. In the US, it’s Mexico, the Philippines, India and China—in that order. In Australia, Asians are the fastest-growing migrant community, accounting for 24% of the foreign-born population.

Nations constantly in the making
These nations—most specially the US, Australia and the UK—have traditionally been immigrant-friendly, with more liberal asylum policies than any other country in the world.

However, these are unsettling changes in difficult times. The scale of foreigners moving in every year has turned them into nations constantly in the making. And there’s only so much constant change that people and countries can digest without some kind of a reaction setting in. Typically, the reaction is showing up in two forms—in perceived economic problems of migration and in politics.

For one, the economy isn’t in great shape just now—with sub-5% GDP growth rates almost everywhere (see country profiles).

For another, the percentage of immigrants in all countries—without exception—is higher than the percentage of unemployment. There’s a growing and palpable fear, therefore, that immigrants are taking away local jobs. When the jobs threatened are also high-profile, high-paying ones—like in the technology sector—the fear is significantly heightened.

Add to that the growing security concerns post-9.11 and you have a brew of issues waiting to boil over. As Nasscom president Kiran Karnik said in a recent column—"There’s little doubt that the general ambience of insecurity, engendered post-September 11, is contributing to a suspicion of the ‘other’ and leading to some excesses with regard to checking of visas, etc. In many countries, this is further accentuated by increasing unemployment rates and concerns that immigrants are taking away local jobs."

Security concerns may well pass away. Immigration won’t. Karnik also believes that the immigration issue is big enough to have called for the setting up of an International Migration Organization. "As trade increasingly moves from goods to services, mobility of people is going to be a critical—and probably contentious—issue," he adds.

The other half
But the economy is only half of that picture. Politics is the other. It is here that fears—real or perceived—are articulated and acted upon. It is also a realm of activity the IT services sector and the Indian government like to steer clear of.

The US government, on the other hand, tracks political activity all over the world—from Burkina Faso to India and Somalia.

It regularly issues travel advisories to its citizens about nations that are believed to be "high risk". The Indian government and trade bodies fight shy of doing that.

It is a mistake to believe, however, that the IT sector works in splendid isolation from politics. It is also a mistake to believe that extremist political organizations are reactionary and, therefore, irrelevant. Extremist leaders who lose elections nevertheless play an important role—they bring extremist debate into the political mainstream. They also force mainstream parties to take a more hard line stance (see box, It’s the Politics, Stupid). Just look at the transformation of political discourse in India in the last decade.

The far right argument may or may not be borne out by facts. But that is irrelevant. These are not just nations in the making. It is a New World in the making, with the Indian IT services sector—willy-nilly—dead-center of that churn.

At the very least, what we need to do to turn the tide is take our blinkers off.

Sarita Rani and TV Mahalingam

The Backlash—No longer a Coincidence>>>>>>>

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