12-27-2003, 12:11 AM
Forbes Face of the Year: Kiran Karnik
(url recycles so posting in full)
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->NEW YORK - Recently, our readers voted "offshoring"--the movement of traditionally high-paying jobs from rich countries to poorer ones--the most significant business trend of 2003. We agree, <b>so for our Face Of The Year, we have selected Kiran Karnik, a man trying to direct the path of the offshoring tsunami. </b>
As president of the National Association of Software and Service Companies, or NASSCOM, Karnik is in a unique position to do just that. NASSCOM is the self-proclaimed voice of the Indian information technology industry. Its charter is to promote India's technology strength to the world, and to foster a business-friendly environment for companies setting up shop there.
And a lot of foreign companies are doing just that. Over the last few years, many crucial "white collar" tech jobs such as application development, database design, integration and services have moved to India. Tech currently accounts for some 3% of India's gross domestic product, or $16.5 billion, up from just $1.7 billion nine years ago. The big driver? Exports of software and services to the United States.
By 2015, experts predict that 3 million U.S. white collar jobs will be farmed out to other countries, up from about 300,000 today. Whether that is good or bad news for the U.S. economy long term is a matter of considerable debate, but it could already be having an impact. Consider that in the third quarter, U.S. GDP grew 8.2% but the unemployment rate dropped only two-tenths of 1%.
"Offshore outsourcing was triggered by the intention to cut costs, but now it's not just driven by cost factors," says Karnik, 56. "We are helping [U.S. companies] tap into talent that is scarce in the United States."
It's the "scarce" part that grates on some American captains of industry, such as Intel's (nasdaq: INTC - news - people ) Andrew Grove and IBM's (nyse: IBM - news - people ) Sam Palmisano. Both have pointedly expressed fear that the Unites States is losing its technical edge to other countries. Palmisano says that IBM will pledge $200 million to train employees for jobs that might otherwise leave the country. (It's somewhat ironic, since unconfirmed reports recently said that IBM will send up to 4,700 software jobs outside the United States.)
A backlash may already be beginning. Both Dell (nasdaq: DELL - news - people ) and Lehman Brothers (nyse: LEH - news - people ) recently elected to bring back some jobs to the United States.
Karnik acknowledges the rumblings. "We began to see some concern [about loss of U.S. jobs] in 2003 that has not been there in the past, but by and large, that is not the mainstream view."
In the meantime, Karnik says it's his goal to more than double India's share of the global software production to 6%.
Dennis McGuire, too, acknowledges growing protectionism but says U.S. companies will search the world for whatever makes them more competitive. McGuire is president of TPI, a Houston-based consultancy focusing on outsourcing deals. He says companies need to outsource commodity processes so they can focus on their own competencies. "Does it matter if you have world class accounts payable?"
Karnik, who is a physicist by training and spent two decades with the Indian space agency, is keening aware of an impending shortage of sciences and engineering-based talent in the United States.
India, with a population topping one billion, turns out 75,000 IT Graduates annually, by far its most popular area of study. In the United States, the number of students graduating with computer and information science degrees have grown more than 70% since the mid-nineties but are still far outpaced by business, social science and education degrees.
Offshore outsourcing has been quietly building up for years but 2003 will likely be remembered as the year that it burst into the mainstream. Despite concerns in the United States about unemployment and lost innovation, there is no turning back. The pressure on U.S. companies to cut costs and compete globally is too compelling.
Will India continue to receive the lion's share of outsourced jobs from U.S. companies? Probably, but Karnik needs to be aware of growing competition from professionals in China and Russia. Skilled labor there is equally plentiful, and equally cheap. And equally hungry.
Says McGuire, <b>"China has seen the Indian miracle, and they want a piece of it." </b>
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(url recycles so posting in full)
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->NEW YORK - Recently, our readers voted "offshoring"--the movement of traditionally high-paying jobs from rich countries to poorer ones--the most significant business trend of 2003. We agree, <b>so for our Face Of The Year, we have selected Kiran Karnik, a man trying to direct the path of the offshoring tsunami. </b>
As president of the National Association of Software and Service Companies, or NASSCOM, Karnik is in a unique position to do just that. NASSCOM is the self-proclaimed voice of the Indian information technology industry. Its charter is to promote India's technology strength to the world, and to foster a business-friendly environment for companies setting up shop there.
And a lot of foreign companies are doing just that. Over the last few years, many crucial "white collar" tech jobs such as application development, database design, integration and services have moved to India. Tech currently accounts for some 3% of India's gross domestic product, or $16.5 billion, up from just $1.7 billion nine years ago. The big driver? Exports of software and services to the United States.
By 2015, experts predict that 3 million U.S. white collar jobs will be farmed out to other countries, up from about 300,000 today. Whether that is good or bad news for the U.S. economy long term is a matter of considerable debate, but it could already be having an impact. Consider that in the third quarter, U.S. GDP grew 8.2% but the unemployment rate dropped only two-tenths of 1%.
"Offshore outsourcing was triggered by the intention to cut costs, but now it's not just driven by cost factors," says Karnik, 56. "We are helping [U.S. companies] tap into talent that is scarce in the United States."
It's the "scarce" part that grates on some American captains of industry, such as Intel's (nasdaq: INTC - news - people ) Andrew Grove and IBM's (nyse: IBM - news - people ) Sam Palmisano. Both have pointedly expressed fear that the Unites States is losing its technical edge to other countries. Palmisano says that IBM will pledge $200 million to train employees for jobs that might otherwise leave the country. (It's somewhat ironic, since unconfirmed reports recently said that IBM will send up to 4,700 software jobs outside the United States.)
A backlash may already be beginning. Both Dell (nasdaq: DELL - news - people ) and Lehman Brothers (nyse: LEH - news - people ) recently elected to bring back some jobs to the United States.
Karnik acknowledges the rumblings. "We began to see some concern [about loss of U.S. jobs] in 2003 that has not been there in the past, but by and large, that is not the mainstream view."
In the meantime, Karnik says it's his goal to more than double India's share of the global software production to 6%.
Dennis McGuire, too, acknowledges growing protectionism but says U.S. companies will search the world for whatever makes them more competitive. McGuire is president of TPI, a Houston-based consultancy focusing on outsourcing deals. He says companies need to outsource commodity processes so they can focus on their own competencies. "Does it matter if you have world class accounts payable?"
Karnik, who is a physicist by training and spent two decades with the Indian space agency, is keening aware of an impending shortage of sciences and engineering-based talent in the United States.
India, with a population topping one billion, turns out 75,000 IT Graduates annually, by far its most popular area of study. In the United States, the number of students graduating with computer and information science degrees have grown more than 70% since the mid-nineties but are still far outpaced by business, social science and education degrees.
Offshore outsourcing has been quietly building up for years but 2003 will likely be remembered as the year that it burst into the mainstream. Despite concerns in the United States about unemployment and lost innovation, there is no turning back. The pressure on U.S. companies to cut costs and compete globally is too compelling.
Will India continue to receive the lion's share of outsourced jobs from U.S. companies? Probably, but Karnik needs to be aware of growing competition from professionals in China and Russia. Skilled labor there is equally plentiful, and equally cheap. And equally hungry.
Says McGuire, <b>"China has seen the Indian miracle, and they want a piece of it." </b>
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