Offshoring helps, not hinders, Europe, minister says

European companies are benefiting from offshoring to India and other emerging economies, but India must reciprocate by opening its economy to services from the European Union, said Alan Johnson, the British Minister for Trade and Industry, at the opening session of an E.U.-India Business Summit in Delhi on Wednesday.

His remarks come amid concerns expressed by some politicians and labor groups in Europe that outsourcing and offshoring work to India and other parts of the world poses a threat to European jobs.

Offshoring has helped domestic business in Europe to become more competitive, the minister said, according to a transcript of the speech provided by the Federation of Indian Chambers of Commerce and Industry.

However, the process must be a two-way street, the minister said. Services industries account for two-thirds of the gross domestic product (GDP) of the E.U., while it is only half of India’s GDP, he said. “We stand to benefit from Indian service providers, offshore and onshore,” Johnson said. But Europe also has much to offer India in services such as retail, accountancy, advice on European company law, and insurance, he said.

The U.K. holds the presidency of the E.U. from July 1 to Dec. 31 this year.

If Europe is to achieve its goal of becoming the most competitive economy in the world, it must look at outsourcing as a model that serves the interests of both sides and strengthens competitiveness, rather than something that detracts from Europe’s prosperity, said Kamal Nath, India’s Minister of Commerce and Industry, speaking at the summit.

A key concern relating to outsourcing expressed by Indian officials in Delhi was the need to make it easier for Indian professionals to travel between India and European countries. “I emphasize that I do not speak of immigration, but the need to facilitate professionals to travel if this type of economic engagement is to be properly serviced,” Nath said.

The E.U. and India announced a joint action plan on Wednesday that covers cooperation in a number of areas, including science and technology, the fight against terrorism, migration, and academic and cultural exchanges.

The joint action plan was announced after a meeting between India’s Prime Minister Manmohan Singh, British Prime Minister Tony Blair, who is in India on a three-day visit, Jose Manuel Barroso, President of the European Commission, and other officials.