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Obama bypasses India's outsourcing capital

By Ian Williams, NBC News' Correspondent

BANGALORE, India – Kenny Jones adjusted his microphone, waiting for his cue. "Radio Inigo 919. It's 20 minutes after 10 o'clock."

He took a couple of breaths over the fading beats of Katy Perry's "Teenage Dream" before asking listeners to call in and let off steam over problems on the airport road.

"Every day there are 400 new cars added to the streets here," said the DJ from Ohio who now hosts one of hottest radio shows in Bangalore.

NBC News

Sean Blagsvedt, a California native, works with an Indian colleague on the streets of Bangalore.

His show, which plays international music, has a massive following among the young technology crowd in this, India's high-tech hub.

"This place is really booming," he told me when he came off air. "It’s very happening, a real melting pot. People come from all over the place. Look at me!"

A little later, in another part of this rapidly expanding city, I met Sean Blagsvedt, from California, who started up Babajobs.com, a pioneering employment agency for blue collar workers, such as drivers, cooks and gardeners, which uses text messaging.

"Basically, people text in their profile, a simple profile," he told me. "We then send back a text of matching jobs. Suddenly the phone is a digital tool that enables people to get connected to better information."

Blagsvedt came to Bangalore in 2003 for Microsoft, but left four years later to set up Babajobs, seeing an opportunity in the explosive growth of cell phone usage in India, which now has more than 700 million cell phone lines.

"There's a lot of hope in this city," he said.

I didn't expect to meet people like Jones and Blagsvedt in Bangalore. After all, this is the city frequently blamed for taking American jobs. Its India's outsourcing capital, and "to be Bangalored" has fast become a term for losing a job.

Some 60 percent of the work done by India's $60 billion IT and outsourcing industry for the U.S. is done here. The industry employs around 4 million people, and Bangalore is the hub.

President Barack Obama chose to skip this city which used to be at the top of the list for visiting dignitaries. So I came here to see what he is missing.
 
Not about cheap labor, about ‘being global’
Obama, when he was still a candidate, declared that he wanted to see jobs created in Buffalo, not Bangalore.

But the city has continued to boom, and Bangalore has now moved well beyond the call centers and back-office work where outsourcing started in the 1990s.

The city now hosts some of the world's most cutting edge research and development work, and the glittering new office blocks here are a roll-call of America's technology giants, employing highly skilled Indian workers.

Unlike most visiting dignitaries, President Obama has opted not to go to India's high-tech capital of Bangalore, the center of the outsourcing industry he has blamed for taking American jobs. NBC's Ian Williams reports.

"We don't do things because it’s cheap. We do things because of the expertise available here," said Raj Raghavan of GE India Technology. GE, the parent company of NBC Universal, has set up in Bangalore its biggest technology center outside the U.S., employing 4,000 people on work that includes the latest medical diagnostics and aero-engines. (Msnbc.com is a joint venture of Microsoft and NBC Universal),

Still, in spite of rapidly increasing wages here, skilled software engineers cost only a fifth of their U.S. counterparts.

But Raghavan was quick to say, "This technology center is not about outsourcing, it’s about being global."

GE is also now concentrating increasingly on developing products for the fast growing Indian market. Raghavan showed me a portable electro-cardiogram GE's developed for rural healthcare.

"India's going to be big for GE," he told me. "It's a win-win situation for everyone."

There is a similar story at CISCO and at Texas Instruments, which is celebrating its 25th anniversary in Bangalore. Texas Instruments released a picture to a local newspaper of their first satellite dish being unloaded from the back of a bullock cart.

For many U.S. companies, their Bangalore operations give them an important foot in the door, and they say benefits will flow back to the U.S. as the Indian market takes off.

‘Jobs will go wherever the talent is’
Early one morning I visited Tutorvista, which provides online tutors to the world. It too is booming, with the fastest growth from the U.S.

"People think we are taking jobs away from the U.S.," said Srinivas, a tutor, between teaching algebra lessons to two high school students in the U.S., where it was evening. "It's unimaginable that this could be done from the U.S. The cost would be 10 or 12 times what we are providing."

Tutorvista, which charges $100 per month for unlimited access to a private tutor, argues that far from taking jobs, they are providing an additional service for people who could not afford the cost of a private tutor in the U.S. Their biggest growth area recently has been from older people attending community colleges, going back for more education during the economic downturn.

A recent survey of Bangalore's IT workers found a majority understand the anger in the U.S. towards outsourcing. But they were proud of the work they are doing.

“Jobs will go wherever the talent is," said Sunder Prakashaw, who runs a company called Get Friday, which provides personal assistants to small businesses and busy individuals. "America will have to find new ways to reinvent itself."

One of Sundar's proudest moments was when a client phoned from the New York subway, where he was lost, and Get Friday helped him figure out where he was and organized a taxi for him a couple of stops down the line.

‘Jobs based on merit’
Technology colleges are expanding across Bangalore to meet the demand for skilled workers. One of the most prestigious is RV College of Engineering, where I met students working on a project to design a racing car. They were defensive about accusations that Bangalore is taking American jobs.

"As long as people are getting jobs based on merit, that shouldn't be a problem I feel," one of the students told me.

Yet in many crucial ways, they were still looking to America. They showed me their car, telling me the engine and the chassis material came from the U.S., since it was the best source. And after graduating, 10 out of the 15 team members said they want to do post-graduate work in the U.S., which for them was still the best place to study.

Later that day I read another newspaper article complaining about the outsourcing of jobs. Only this time it was an Indian newspaper article about jobs moving away from India, where costs are rising fast, to the Philippines, which is now set to take over as the call center capital of world. It seemed that Bangalore was being Bangalored.

Which I guess is the reality of a globalized economy.
 
Before I left the city, I bumped in to Sean Blagsvedt again at a packed city bar. It was "Booze and Clues" night, a drink-fueled quiz night, attended mostly by the tech crowd, and his team was doing well.

He told us that four members of his family had recently lost jobs in the U.S.

"The U.S. economy has to make things the world wants," he said.
 
His business is rapidly expanding across India, providing a simple but very effective service for a huge sector of India that previously only learned about informal jobs via word of mouth. He now plans to expand to Indonesia.

The relationship between Bangalore and America is a complicated one. It’s certainly is not a zero sum game. There is so much more to this city, and it’s far from being all bad news for the U.S.

I think on balance, Obama should have come here, but I'd be interested to hear whether readers of this blog think he was right to ignore India's most dynamic city.