Remember the "travel advisory" issued by the US during the India-Pakistan standoff in 2002? When the US said a nuclear exchange was only a weekend away, it put thousands of foreigners on the next plane out and affected investments into India. The outsourcing backlash has a depressing sense of deja vu. The scare scenarios are once again painted in grisly colours and Indian and US companies have been floundering in the face of old-fashioned protectionism and political populism. A sampling of the voices involved is telling.

UNQUIET AMERICANS: Kerry wants US companies to stop outsourcing

INDIA'S STRATEGY

The Indian Government and the industry have a three-pronged strategy against the BPO backlash DIPLOMATIC OFFENSIVE: The Indian Embassy in the US will work with the Congress and community leaders to dispel outsourcing fears. CORPORATE PLANS: CII-NASSCOM have hired top Washington lobbyists to make issue briefs for US legislators, besides working with the US-India Business Council to help US firms counter backlash. TAPPING NRIS: Task force has been set up to counter the bills banning outsourcing. USINPAC teaming up with American Jewish Committee since ban will also affect Israel.

"There is no job that is America's by God-given right anymore," says Carly Fiorina, chief executive of Hewlett Packard. "We have to compete for jobs." The Democrat presidential hopeful, John Kerry, denounced the Bush Administration for "rewarding Benedict Arnold CEOs" who move "profits and jobs overseas". Kerry wants to introduce a New Economy version of the "Made in US" label-by requiring companies to tell the Labour Department and the workers where, when and why the jobs are moving abroad. No wonder, Union Commerce Minister Arun Jaitley says, "It is strange that on the one hand people are talking about the opening of markets and on the other hand banning business process outsourcing."

It is election year in America and it may be the compulsion of electoral populism at work. Although none of the anti-outsourcing legislation has been passed, about 80 bills against outsourcing are being introduced in 30 American states. This follows a federal law which means US companies which receive federal contracts cannot sub-contract work to companies overseas. Just as middle America is agitated by white-collar job losses, middle India is equally worked up about job denials. So the decibel levels on both sides of the Atlantic is pretty high. The stakes are daunting-Forrester Research estimates 3.3 million US jobs could move offshore in the next few years. India currently has 2,10,000 outsourced jobs with it. The worldwide BPO market is likely to grow at an annual 9 per cent to touch $1 trillion by 2006 from $773 billion in 2002, according to an International Data Corporation (IDC) survey. On India and the future, it said the BPO industry in India would grow at 54 per cent annually in the next four years, from $2 billion (Rs 9,000 crore) in 2002 to $12 billion in 2006.

The question is, should the Government take a more proactive stand on this issue? Should it leave it to Indian industry to deal with their American counterparts? Or is silence golden?

The Government has decided to maintain a low profile on the issue for two reasons: that the storm might blow over after the US elections later this year; and that India is wary of making this into a US-India bilateral issue. As former ambassador to the US Naresh Chandra says, "Israel and Ireland are also targets of the outsourcing backlash, and anyway, Indians in America have created jobs as well, either as angel investors or through start-ups."

Nevertheless, the Indian Government has adopted a three-pronged strategy. This includes backroom lobbying, making Indian software exports less US-centric and looking for ways to invest in the US market to showcase a job-creation enterprise. The easiest alternative is the UK which actually welcomes outsourcing to India, with HSBC and British Airways leading the way. But analysts say the UK is insignificant compared with the US market.

ROB A JOB: US firms are setting up call centres in India to cut costs

External Affairs Minister Yashwant Sinha has been doing his own bit, lobbying with his US counterpart, Secretary of State Colin Powell, who has reiterated the US Administration's support to outsourcing. During his last visit to Washington in January, Sinha made a persuasive case with both the Senate's Foreign Relations Committee and the House of Representative's International Relations Committee.

Jaitley is playing hardball on trade negotiations. There is a belief in the Commerce Ministry that a lot of the US pressure on India vis-a-vis outsourcing may be a kind of retaliation against the setback at the WTO talks at Cancun in September 2003. In addition, if the agriculture talks proceed apace, it will be India that will benefit. Instead, India will seek to leverage its "concessions", either in trade facilitation or tariff reductions from the US in return for stopping the BPO ban in its tracks. Meanwhile, Indian-American government-contracting companies are trying to influence the Congress through a task force called govcon under the banner of the US-India Political Action Committee (USINPAC).

Corporate India is playing it safe. Apart from NASSCOM which has undertaken a robust lobbying exercise, the Indian industry is content to let large US corporations fight this battle on their own turf. "Essentially our strategy is to keep our head down and let US corporates deal with this in the interest of their competitiveness," says Tarun Das of CII. A recent study by McKinsey says that for every $1 job outsourced by the US, the US economy recovers $1.14 of the $1.49 value created for the global economy. This is a point being made by Dell, Intel, IBM and HP as they urge the Bush Administration to continue with its hands-off approach.

The problem goes beyond the populist, says Planning Commission member N.K. Singh. "It lies in basic structural adjustments that the US needs to address," he says. That is in the future. For the time being, as Jaitley told US Trade Representative Robert B. Zoellick, "the BPO backlash is merely an alibi for protectionism".