India asks what election means for ‘world’s back office’

NEW DELHI – As Election Day approaches, India is looking nervously at the United States. Pundits here are asking how big an impact the U.S. economic downturn will have on the booming outsourcing business, and how the next U.S. president will react to pressures to protect American jobs.

Anamika Wani, a business consultant in Mumbai, India's financial capital, says she's liked Sen. Barack Obama ever since she heard him speak while she was visiting California.

 

VIDEO: Indians wonder how U.S. election will affect businessÂ

But she says many in India are wary of him. "A lot of the Indian economy has come about through outsourcing," she told me. "Because the U.S. has been willing to shift business centers out of the country. So if that reverses, then there would be a fall in the economy and job losses here, so from that perspective, I think a lot of people don't favor some of Obama's policies." 

Many see Sen. John McCain as more committed to free trade, which will keep the outsourcing work flowing to India.

Closely tied to the U.S. economy
Outsourcing is now a multi-billion dollar industry here. If China is the workshop of the world, than India has become its back office, doing everything from working the phones in call centers to transcribing U.S. doctors' notes and tutoring American students.

There are two schools of thoughts here: either Indian companies will have less work as the slowdown bites, or else more work will be sent to India to keep U.S. costs down. A great deal of backroom legal work takes place in India, and some canny entrepreneurs are already positioning themselves for a flood of work related to bankruptcy and litigation as a result of the meltdown on Wall Street.

What's harder for them to calculate is the politics, and the enormous pressure on the next president to keep jobs at home.

"We are getting so much more integrated," said Dr. Usha Tuteji, a professor of agriculture at Delhi University. "What happens in the U.S. affects the overall welfare of the globe."

She told me that the close interest in the election this year is not only the result of the candidacy of Obama, but also because of the growing numbers of Indians studying in the U.S. "Many middle-class families send their children to the U.S. or U.K. to study, so we've become more curious about what's happening on the other side of the world."

Nuke deal
Aside from Wall Street's woes, the other big news from America has been the signing of a nuclear accord that allows American businesses to sell nuclear fuel, technology and reactors to India. This reversed a three-decade ban on atomic trade with India, imposed after New Delhi carried out its first atomic test in 1974 and refused to sign nonproliferation accords.

The nuclear deal was the result of three years of often difficult political and diplomatic wrangling. The two countries have had a prickly relationship, but the deal seems to signal a new beginning.

"India and the U.S. are coming close economically and diplomatically," said Dr. Nirmal Jindel, Professor of Political Science at Delhi University. "It is very important that India and American should have a strong relationship in the future, so the U.S. election means a lot for us."

There is also a sense here that Obama might be easier to deal with, in spite of suspicions about his commitment to free trade (or outsourcing, from the Indian perspective). "Obama, he doesn't appear to be so hard core," Jindel told me. She thinks Obama might engage more constructively with the world.