Outsourcing U.S. jobs a source of tension on Obama's India trip

Even on the American TV show "Outsourced," a disgruntled American employee whose job was outsourced throws a brick with an attached message through a window.

"The way it's getting framed is that India is the root cause for an economic recession and is somehow being blamed for America's 20-year credit party," said P.V. Kannan, chief executive and founder of 24/7 Customer, a global IT firm that has offices in California and Bangalore. "What is actually going on is an abundance of highly intellectual labor no longer constrained by borders."

U.S. and Indian officials say outsourcing will probably take a back seat to Obama's push for bilateral trade during the trip. The White House has urged India to give U.S. companies better access to the country's emerging middle class, which is larger than the entire U.S. population.

The United States, for instance, is pushing India to allow American universities to set up in Mumbai, Delhi and other cities, potentially bringing in millions of dollars in tuition fees from India's enormous student population. India's university system is vastly overcrowded.

Can both nations benefit?

Obama said he wants to "pry open" Indian restrictions on foreign investment. But Indian industry experts say Washington seems to get upset only when it ends up on the losing side.

"The U.S. has been lecturing India on opening its markets for years, and now they want to protect their markets," said Subhash Dhar, an executive council member of Infosys in Bangalore. "The fact is, for generations and generations, the U.S. was at a competitive advantage because of the principles of a free market and immigration of the best and brightest."

Industry analysts say it is difficult to determine exactly how many jobs the United States has lost to India. Many companies decline to release such data.

Some Indian IT leaders estimate that 350,000 American jobs have moved to India over the past decade, but American outsourcing experts say that number may be much higher. IT leaders in India say outsourcing does not hurt American companies but makes them more efficient and helps the U.S. economy by freeing up money for innovation and investments.

Outsourcing experts and advocates for American workers say that while outsourcing helps corporate America, American engineers and computer programmers see few benefits.

The industry has been a driving force in India's economic boom and helped create a generation of young Indian consumers who have income to spend on cars, computers and spacious apartments.

"They have successfully built a business model where not only do they offshore large numbers of jobs, but the fraction that remain in the U.S. are filled by lower-paid foreign guest workers," said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology and author of the book "Outsourcing America." "They are often also forced to train their foreign replacements."

Ahead of Obama's trip, Indian IT industry leaders have been working on softening their image.

"So much innovation and our ideas still come from the U.S.," said Dhar, of Infosys. "The U.S. is still the largest economy in the world. If America does well, the world does well."