The Hindu Business Line : `Tough talks at WTO must to have free trade in BPO'

PREDICTING that business process outsourcing (BPO) has the potential to outpace software services in India, Mr Vinod Khosla, General Partner, Kleiner Perkins Caufield &Byers, has said that the country has to do some hard bargaining in the World Trade Organisation (WTO) negotiations with regard to free trade in technology services.

Founder of Sun Microsystems, Mr Khosla, who is in India on a personal visit to take part in micro-finance, said: "India has to take up the issue of software services during its negotiations with the US.''

This, he felt, was extremely challenging aspect and perhaps more important than issues which the Government is seeking to address along with countries like Brazil.

Addressing a press conference after re-launching the Hyderabad chapter of The Indus Entrepreneurs (TiE), he said, "The Government should strive hard to make free trade in outsourcing area an important aspect and part of the trade agreements. Getting right clauses in the agreement is a vital aspect for growth and this can be achieved through hard bargaining and negotiations. I have met with Indian policy makers and have also discussed this issue."

"Outsourcing is a business decision. Businesses are run by chief executive officers of corporations and politicians have no business to take business decisions. I think outsourcing is an economic decision taken by each company making such a decision. As long as this continues to provide value for business decision makers, this will continue to grow. The current legislations by some States seem to be a political move in an election year. Here, we may expect some short-term rhetoric. However, the loss of some jobs is also a matter of concern for people who lose them. These can be addressed by right policy moves. For instance, during just one slowdown, about three million jobs were lost. But with some right decisions, the US Government can create lot many jobs in new sectors while companies continue to benefit from outsourcing," he said.

According to a Forrester study estimate, about 3.3 million jobs could be lost through outsourcing by the year 2015. This is very small given the fact that there could be lot many jobs that could crop up in news areas of economy like construction sector.

Speaking about new technology trends, Mr Khosla said areas such as nanotechnologies, fuel cells, biotechnology, energy, biometrics, sensors and building materials could throw up very exciting products and services. However, as far as India is concerned, building and construction sector could emerge as the single largest industry by the year 2035. Given the projections, it is likely that India could well be in league with the US and China by the year 2035 if the country is able to sustain its GDP growth.

The global venture capital industry is over-funded particularly in the US and these venture capitalists have a lot of funds still left with them from the pre-bubble days. Like in the US, which took about two decades to have large VCs and mentors, India would need some more time to have such a pool, Mr Khosla said.

On the issue relating to Indian companies developing software products, he said the only way to approach this important issue is by having either partners or locate offices in the US to support and grow them.