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Infosys co-chair: Mistake to erect protectionist barriers

On the eve of the G-20 meeting near London, Nandan Nilekani urges continued free flow of labor and free trade as best remedy to the global economic crisis

Faced with a growing protectionist backlash in the United States, the co-founder of one of the world's biggest IT outsourcing companies remains confident that the political controversy over exporting technology jobs overseas will ebb.

Infosys co-chairman: Nandan Nilekani

"Given the economic climate, there will always be protectionism. When the economy slows down, it's a reasonable thing to happen," Infosys Technologies' co-chairman Nandan Nilekani said Monday, adding that cooler heads ultimately will prevail. "We continue to believe that outsourcing adds value to the economy."

Nilekani, who is touring the United States on a book tour, said that both the United States as well as the larger global economy would benefit by resisting the temptation to erect trade barriers or rules which slow the flow of labor and capital.

"But," he quickly added, "I can understand the sentiment about these matters."

And it is a sensitive issue as the issue of moving IT jobs overseas is a perennial topic of discord. Now, with technology companies handing out tens of thousands of pink slips as the recession gathers force, the question is that much more fraught. Late last year, word leaked to the Wall Street Journal that IBM would transfer 5,000 jobs from its U.S. payroll to India, where the cost of labor is lower.

Separately, the employee organization, Alliance@IBM, contendsthat Big Blue will fire around 10,000 people during the current quarter.

A related hot button: the H1-B visa for admitting high-skilled workers from abroad. After Microsoft earlier this year announced the first across-the-board layoffs in its history, Iowa Sen. Charles Grassley (R-Iowa) urged the company to rethink its approach and give Americans priority over foreigners for any available jobs.

So with leaders of the world's biggest economies meeting later this week near London for the G-20 conference, companies like Infosys will be closely watching the discussions for hints of protectionism. It's unlikely the meeting will be undercut by the adoption of beggar-thy-neighbor policies. Still, in the aftermath of the global financial meltdown, the free market approach championed for years by the Americans and the English is out of favor with many of the world leaders slated to participate in the conference.

Watching from the sidelines, Nilekani said he was aware of the political problems facing policy makers, but maintained hope that an increasingly intertwined global economy would, ultimately, trump parochialism.

"We believe that keeping free trade open is in everyone's interests," he said. "I hope that when the G-20 meets, they will keep free trade open."