Posts from — April 2009

Does the offshoring and outsourcing of Information Technology and related skills hurt America? How much does it hurt.  I just finished reading an editorial comment in Information Week magazine from Bob Evans, Senior VP and Director of their Global CIO unit. By Bob’s estimate, drawn from Forrester Research numbers,  perhaps $60 billion of work was offshored by American companies in 2008. That’s a lot of dough and thousands of jobs. But then he points out that just four American companies, Eli Lilly, Nike, Boeing, and John Deere had revenues of $54 billion from outside the United States in the last four quarters.  Bob’s point is that offshoring of outsourced work is a small component of the overall economic activity.

(While I agree with the conclusion, there is a hidden fallacy in the international revenues of those four companies, particularly Nike.  I bet 90% of Nike’s international revenue does not result in any American jobs; it’s Asian workers being hired and the products are being sold in Asia or Europe or elswhere).

It turns out that there is INDEED a more complete analysis of the number of American jobs created by exports to Asia. According to the East West Center, Inn manufacturing along, the number of American jobs created or supported by exports to Asia in the year 2008 was 1,515,026.

This includes over 290,000 jobs in my home state of california alone. And the stats don’t count services jobs such as those created in Hollywood, or such as those created by engineering and construction companies. Merchandise exports to Asia earned America $305 billion. This far exceeds exports to the European Union ($230 billion).  What’s more, American exports to Asia grew 67% from 2001 to 2007 (whereas they grew only 53% to EU and 47% to Nafta countries).  Growth rates are best calculated over five year moving intervals since a major purchase of aircraft or infrasctructure in a given year can distort the year-to-year growth numbers. The East-West Center’s website for this data is appropriately called AsiaMattersforAmerica and is worth a visit.  The East-West Center is an education and research organization established by the U.S. Congress, so you can be sure that it free of bias from “external” sources.

Business Week just published its list of India’s 50 most powerful people . You may be surprised how many of them have strong links to the West, most often to the United States.

Among captains of industry, Ratan Tata has a degree from Cornell, Mukesh Ambani studied at Stanford’s Graduate School of Business, his estranged brother and Anil Ambani got an MBA from Wharton. Anand Mahindra has an MBA from the Harvard Business School. Azim Premji studied Electrical Engineering at Stanford and MS Ramadorai of Tata Consultancy Services has a degree from UCLA. Vijay Mahajan of Basix was educated at Princeton

Some are running Indian units of American companies, such as Shankar Annaswamy of IBM, who presides over the largest number of IBM-ers in any country outside the United States. And Sailesh Rao runs Google India, while Ashwini Vardi runs upstart TV channel Viacom Colors and Amit Verma is affiliated with Wall Street Journal’s joint venture, called the The Mint. Ronnie Screwala’s UTV took in a majority investment from the Walt Disney Company.

And some Indians own important interests in the United States, such as Ajit Balakrishnan of Rediff.com which also publishes the weekly print paper from New York, India Abroad. Others have received significant investments from American venture capitalists, such as microfinance king Vikram Akula, whose company SKS Finance was funded by Sequoia Capital (Akula is a product of Tuft, Yale and McKinsey & Co); Draper Fisher Jurvetson funded the Reva Electric Car company led by Chetan Maini, who has a US degree in mechanical engineering.

On university campuses, American degrees abound. Dr. Ashok Jhunjunwala at IIT Madras earned his PhD from the University of Maine; he made it to Business Week’s list on the strength of a series of startups that have launched under the leadership of his TeNet center. US universities have invited IT billionaire NR Narayana Murthy to join their boards, including Yale, Stanford, and Harvard. Of course, Murthy’s company, Infosys draws the largest chunk of its revenue from the United States.

Some on the list actually live in the United States but have a strong interest in India. Silicon Valley billionaire venture capitalist Vinod Khosla of Khosla Ventures has taken a strong interest in India, funding alternative energy, microfinance and other companies. New York based PepsiCo CEO Indra Nooyi is the current Chairperson of the US India Business Council. Strategy guru, professor and prolific author CK Prahalad is on the faculty of the University of Michigan but lives in San Diego and travels to India frequently.

Are Indian politicians immune from such US links? After all, Gujarat Chief Minister Narendra Modi was denied a visa by the Bush administration. And Mayawati of Uttar Pradesh has never even travelled to the United States. But Oxford- and Cambridge- educated Indian Prime Minister Dr. Manmohan Singh has a daughter, Amrit, who is an attorney with the ACLU in New York.

That’s 21 of the 50 and I am sure I have missed a few.

The India expert normally doesn’t write about Indian-Americans.  Our focus is looking at India from the outside and helping the world deal with India. But President Barack Obama has taken three significant actions to re-inforce one of the (positive) stereotypes of Indian Americans and I must comment on this new trend.

First, Dr. Sanjay Gupta of CNN was under very  serious consideration for Surgeon General of the United States. While this did not mature into an appointment, it was affirmation of the growing intellectual influence of people of Indian origin.

Then the President chose 34-year old Indian-born Vivek Kundra as his Chief Information Officer (CIO).  A native of New Delhi, Kundra spent many of his formative years in Tanzania before graduating from the University of Virginia with a bachelor’s and the University of Maryland with a Master’s in Information Technology. Kundra was the Chief Technology Officer for the District of Columbia.

Vivek Kundra

Earlier today, Obama announced the appointment of another person of Indian origin. This time it is 36-year-old  Aneesh Paul Chopra as the first Chief Technology Officer (CTO) for the United States.  Silicon Valley icon Tim O’Reilly is already raving about this, despite the fact that Chopra is not a valley insider ( another Indian American, Padmasree Warrior of Cisco was reported to be in the running  some time ago). Chopra has a Masters in Public Policy from Harvard University’s John F. Kennedy School of Government graduated  and a B.A. from The Johns Hopkins University in 1994. He was the Secretary of Technology for the Commonwealth of Virginia prior to this appointment.

Aneesh Paul Chopra

Watch out DC, the Indians are coming.

According to Business Week’s April 2009 report on the 50 most innovative companies on the planet, Apple, Google and Toyota lead in innovation.  The United States dominates the list with half of the 50 companies. India is represented by three companies: the Tata Group at #13, Reliance Industries Ltd. at #15 and Infosys at #26.

Note that the Tata Group consists of 91 separate companies in businesses as diverse as tea, cars, steel, and IT service. Ratan Tata is the chairman of the Tata Sons holding company but most of the stock in these companies is held by non-profit Tata trusts and by the instituitional and indvidual stockholders.  Reliance Industries is run by the richest man in India, Mukesh Ambani, son of founder Dhirubhai Ambani. (Mukesh’s estranged brother, Anil, runs Reliance ADAG group). Reliance Industries is primarily in the petrochemicals business; it also made a huge investment in recent years into the retail sector.  Infosys, based in Bangalore, was started by seven engineers and is an IT services company with a strong focus on financial services.

In my view there are many more innovative companies in India as well as in China (BW only found one in China: Lenovo).

India is the largest borrower from both the World Bank and the Asian Development Bank and has always made good on its loan payments. The moneys are used for mega-development projects, usually around infrasctructure.

But a new plan to develop flood management, water supply and sanitation in the northeastern border state of Arunachal Pradesh caused China to block India’s request. Arunachal borders China and in 1962 the two countries were involved in a military skirmish.  Neither country accepts the other’s version of the border at this time.