Sunday, January 29, 2006


Cotton, cars and the BPO/ITES industry

By 2020 India is estimated to have about 40 million people in the working age group as surplus manpower, while the rest of the world will be collectively under a shortage of employable-age workforce. BPO/ITES industry proponents point this out and ask the following questions? What is wrong with providing gainful employment to millions of young men and women, with excellent working conditions, good pay and dignity of labor? What is wrong if India utilises its excess manpower to become the back office for the world? We have already seen outsourcing of activities ranging from data entry, medical transcription, legal paperwork, accounting and audit paperwork. There is even outsourced remote front-office management, where a 'receptionist' sitting in India welcomes visitors to an office in the US and offers a seat, calls up the right person to meet the visitor, and offers some coffee!

Each of these individuals, currently armed with high school certificates, or an undergraduate degree, cannot find jobs that pay as much or provide as much work comforts and even social status. So what is wrong?

Export of raw cotton is a viable business, and could be a profitable business as well. By the late nineteenth century, British India was exporting huge amounts of cotton to be converted into textiles by the flourishing textile industry centered around Manchester, that supplied cotton textiles to the global market. By then, the once thriving textile industry of India, fabled for a thousand years or more was in shambles. Not only did the industry disappear, the fact of such preeminence in cotton and silk textiles that existed in India has itself been forgotten by the collective memories of the people of India. By imposing constraints and taxes on the local textile industry, the British systematically destroyed the local industry, and used the local labor to produce the cotton that powered the industrial revolution.

Instead of exporting cotton, we are now exporting the mental labor of millions of young men and women. instead of being forced by a colonising nation to export cotton, we are voluntarily exporting this mental labor. Just as cotton was cultivated at very low costs with the bulk of the profits of the finished textiles going to the owners of the Manchester factories, the cheap labor of the Indian youngsters is powering the creation and continuation of the lead in technology, and intellectual property of the developed nations. Instead of looking at the long term consequences of a generation of youngsters working cheaply to relieve the drudgery of citizens of another country, the sovereign government of India is quite pleased about the inflow into the exchequer and is happily planning to accelerate this 'positive' development.

The tragic plight of cotton farmers across the country only highlights the misplaced emphasis on the BPO/ITES sector by decision makers in government.

Of course increase in jobs in ITES/BPO sector is a welcome development. For the thousands of youngsters who cannot be employed elsewhere with their useless college degrees, this is a great opportunity for upward mobility. What is unwelcome is for governments to plan for the long term continuity and growth of this segment at the expense of planning for leadership in areas where we are lagging far behind. What is unwelcome is the promotion of these jobs as lifelong career options for youngsters, working on infrastructure to enable these industries to thrive, providing tax sops for outsourcing companies, and similar steps that entrench this as a long term dominant activity.

In contrast to the above, there is an ongoing revolution in the automotive spare parts industry in India, where we are rapidly becoming the suppliers of spare parts to every auto manufacturer in the world. Closely tied to this growth is the increasing presence of Indian made and branded automobiles in the global market. The example of Indian auto manufacturers rapidly rising to meet the global challenge is worthy of emulation by other industries.

Instead of providing incentives for cotton farming and disincentivising textile factories, should it not be our policy to promote textile industry with facilitation for import of cotton? Should we not promote creative entrepreneurship in diverse areas of trade, production and technology that will offer productive, enriching and rewarding employment opportunities to the same thousands of youngsters currently with unemployable degrees? Do we have a government sponsored entrepreneurship zone just like the proposed BPO/ITES technology(?) parks? Should we not have a lobby group that promotes such entrepreneurship in the lines of NASSCOM?

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