India must use World Trade Organisation (WTO) rules to protect the unfettered growth of US technology outsourcing from protectionist attacks in an election year, a key Silicon Valley venture capitalist said.
"It's important for India that IT services and outsourcing be part of the open trade, global trade paradigm," Indian-born Vinod Khosla told Reuters in an interview late on Sunday from Bangalore, the centre of India's outsourcing boom.
Khosla, the co-founder and first chief executive of network computer maker Sun Microsystems Inc, is currently a general partner at Kleiner, Perkins, Caufield and Byers (KPCB), a leading private equity firm whose portfolio includes Google.
"The WTO is about free trade and it's important that some of these things that are important to us be part of those agreements," said Khosla, a Republican supporter of US President George W. Bush.
The outsourcing of services ranging from software coding to call centre operations has become a hot election issue, with Democrat presidential candidates charging the Bush administration with exporting high wage US jobs to low-cost centres such as India.
The influential 49-year-old said the Bush administration favoured free trade, so he felt outsourcing was here to stay.
EASE THE PAIN: But he said India's outsourcers must help ease the pain of US job losses.
"All I'm saying is we should minimise the negative impacts of outsourcing, and that'll help make it more acceptable."
"So, some of the (US) laws that have been proposed like a 90-day notice period if jobs are being outsourced is a very good idea because it allows people who are affected in the United States to make alternative plans," Khosla said.
India's software and back-office service industries now employ 650,000 and that number is expected to rise 25 percent this year. Exports of such services are expected to rise 26 percent to $9.5 billion in the year to March 2004.
US-listed Indian firms Infosys Technologies Ltd, Wipro Ltd and Satyam Computer Services Ltd are expanding both at home and in the United States to cash in on the boom.
Technology business magazine Red Herring once described Khosla as the "No. 1 Venture Capitalist on the planet" and estimated his work had created six jobs for every day of his stay in the United States, his adopted homeland.
Khosla, the son of an army officer in New Delhi, was educated in the prestigious Indian Institute of Technology and Stanford University in California and has been with KPCB since 1986.
He has helped create firms such as Cerent, bought by network equipment maker Cisco Systems Inc for some $8 billion, as well as Cisco's arch-rival, Juniper Networks
According to industry estimates, Khosla has helped create firms with a combined market value of more than $500 billion.
Khosla said software outsourcing was now well accepted, with US-based start-ups joining Fortune 500 giants in sending work abroad.
Outsourcing had aided the US economic recovery, he added.
"I think productivity has also improved because people have outsourced business processes, and focused a lot more on the things people focus on in recessionary times," Khosla said.
US Trade Representative Robert Zoellick, on a visit to India last week, said New Delhi would need to open up markets in return for outsourcing business. So far, US legislation has only sought to curb government outsourcing contracts.
Indian officials told Zoellick that a backlash against outsourcing could hamper Indian support for world trade talks.