Friday, June 03, 2005

India vs. Old Europe

A Race to the Top
Published: June 3, 2005

Bangalore, India

It was extremely revealing traveling from Europe to India as French
voters (and now Dutch ones) were rejecting the E.U. constitution - in
one giant snub to President Jacques Chirac, European integration,
immigration, Turkish membership in the E.U. and all the forces of
globalization eating away at Europe's welfare states. It is
interesting because French voters are trying to preserve a 35-hour
work week in a world where Indian engineers are ready to work a
35-hour day. Good luck.

Voters in "old Europe" - France, Germany, the Netherlands and Italy -
seem to be saying to their leaders: stop the world, we want to get
off; while voters in India have been telling their leaders: stop the
world and build us a stepstool, we want to get on. I feel sorry for
Western European blue collar workers. A world of benefits they have
known for 50 years is coming apart, and their governments don't seem
to have a strategy for coping.

One reason French voters turned down the E.U. constitution was rampant
fears of "Polish plumbers." Rumors that low-cost immigrant plumbers
from Poland were taking over the French plumbing trade became a
rallying symbol for anti-E.U. constitution forces. A few weeks ago
Franz M√ľntefering, chairman of Germany's Social Democratic Party,
compared private equity firms - which buy up failing businesses,
downsize them and then sell them - to a "swarm of locusts."

The fact that a top German politician has resorted to attacking
capitalism to win votes tells you just how explosive the next decade
in Western Europe could be, as some of these aging, inflexible
economies - which have grown used to six-week vacations and
unemployment insurance that is almost as good as having a job - become
more intimately integrated with Eastern Europe, India and China in a
flattening world.

To appreciate just how explosive, come to Bangalore, India, the
outsourcing capital of the world. The dirty little secret is that
India is taking work from Europe or America not simply because of low
wages. It is also because Indians are ready to work harder and can do
anything from answering your phone to designing your next airplane or
car. They are not racing us to the bottom. They are racing us to the

Indeed, there is a huge famine breaking out all over India today, an
incredible hunger. But it is not for food. It is a hunger for
opportunity that has been pent up like volcanic lava under four
decades of socialism, and it's now just bursting out with India's
young generation.

"India is the oldest civilization, the largest democracy and the
youngest population - almost 70 percent is below age 35 and almost 50
percent is 25 and under," said Shekhar Gupta, editor of The Indian
Express. Next to India, Western Europe looks like an assisted-living
facility with Turkish nurses.

Sure, a huge portion of India still lives in wretched slums or
villages, but more and more of the young cohort are grasping for
something better. A grass-roots movement is now spreading, demanding
that English be taught in state schools - where 85 percent of children
go - beginning in first grade, not fourth grade. "What's new is where
this movement is coming from," said the Indian commentator Krishna
Prasad. "It's coming from the farmers and the Dalits, the lowest
groups in society." Even the poor have been to the cities enough to
know that English is now the key to a tech-sector job, and they want
their kids to have those opportunities.

The Indian state of West Bengal has the oldest elected Communist
government left in the world today. Some global technology firms
recently were looking at outsourcing there, but told the Communists
they could not do so because of the possibility of worker strikes that
might disrupt the business processes of the companies they work for.
No problem. The Communist government declared information technology
work an "essential service," making it illegal for those workers to
strike. Have a nice day.

"This is not about wages at all - the whole wage differential thing is
going to reduce very quickly," said Rajesh Rao, who heads the
innovative Indian game company, Dhruva. It is about people who have
been starving "finally seeing the ability to realize their dreams."
Both Infosys and Wipro, India's leading technology firms, received
more than one million applications last year for a little more than
10,000 job openings.

Yes, this is a bad time for France and friends to lose their appetite
for hard work - just when India, China and Poland are rediscovering


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