'Outsourcing here to stay' - Sun co-founder

A Silicon Valley venture capitalist says companies must work to make outsourcing easier for staff

India must use World Trade Organisation agreements to stop election-year attacks on the now-unfettered growth of US technology outsourcing, a key Silicon Valley venture capitalist asserts.

"It's important for India that IT services and outsourcing be part of the open trade, global trade paradigm,'' Indian-born Vinod Khosla said in an interview on Sunday from Bangalore, the centre of India's outsourcing boom.

Khosla, the co-founder and the first chief executive of computer maker Sun Microsystems, is now a general partner at Kleiner, Perkins, Caufield and Byers, 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 President Bush.

Offshore 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 Khosla said that the Bush administration favours free trade and that offshoring is here to stay.

But he said 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,'' he said.

"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."

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 $9.5bn (£5.08bn) in the 12 months ending in March.

US-listed Indian companies Infosys Technologies, Wipro and Satyam Computer Services are expanding both at home and in the United States to cash in on the boom.

According to industry estimates, Khosla has helped create companies with a combined market value of more than $500bn. Technology business magazine Red Herring once described Khosla as the "No. 1 venture capitalist on the planet."

Khosla, the son of an army officer in New Delhi, was educated at the prestigious Indian Institute of Technology and at Stanford University in California. He has been with Kleiner Perkins since 1986.

He has helped create companies such as Cerent -- bought by network equipment maker Cisco Systems for some $8bn -- and Cisco's arch-rival, Juniper Networks

Khosla said software outsourcing is 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. 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.