Business process outsourcing, or Indian call centers handling back-shop business of some of America's leading companies, has emerged as a major contentious issue between New Delhi and Washington.

The hue and cry raised in United States over job loses has made the Bush administration take a serious note about plugging an economic hole.

Outsourcing of jobs has also snowballed into a major issue for the upcoming U.S. presidential elections.

United States Trade Representative Robert Zoellick told Senate's Finance Committee last week "isolating America from the world is not the answer. We need to open markets for American companies to compete in the world economy, so we can create new jobs and build economic strength at home."

"When we work with the world effectively, America is economically stronger. Ninety-five percent of the world's customers live outside our borders, and we need to open those markets for our manufacturers, our farmers and ranchers, and our service companies."

Armed with the agenda to get Indian markets opened for American exports, Powell arrived in New Delhi Monday, saying trade talks will dominate his visit.

He pressed New Delhi to open up its market access that would offset job losses in his country due to outsourcing.

"Outsourcing is a reality in the 21st century global environment -- both outsourcing and insourcing. We believe reforms and openness benefit both countries. We didn't suggest opening up as a quid pro quo," Powell told reporters after meeting India's Foreign Minister Yashwant Sinha.

"While we have outsourced some job positions to India, there are opportunities for Americans as well to service Indian needs, and we hope India understands the need for reforms so that we can have more opportunities here," the U.S. official said.

"We have to do a good job in the U.S. of creating opportunities to provide more jobs so that those who have lost jobs have opportunities in the future."

Powell asked India to allow more foreign direct investment, continue with economic reforms and ease entry for U.S. businesses in the Indian market.

"There is no quid pro quo. Quite the contrary, reform and openness can help both sides," Powell said.

Sinha did not make a commitment to open up further Indian markets but said the two sides have agreed to remain engaged on the issue of outsourcing.

"We will not allow this or any other issue to create any misunderstanding between us," he said.

"Liberalization, including opening of Indian market, is a process we have carried out over a decade," Sinha said, adding, "This is a process we are determined to take forward because it is in the interest of India."

The exact number of job loses due to outsourcing is not known since the U.S. Bureau of Labor Statistics does not break down jobs lost overseas.

The job-loss estimate that is cited most frequently comes from a 2002 report by Forrester Research, which projected that 3.3 million U.S. jobs would be shipped offshore by 2015.

Indo Asian News Service quoted Gartner Inc., another research firm, as saying that 500,000 information technology jobs may go offshore by the end of this year.

State legislators in Missouri and Kansas have joined the campaign against outsourcing U.S. tech jobs by sponsoring legislation to stem the tide. The legislators have brought bills that would require the states to do certain kinds of business only with contractors that perform the work within the United States.

"We got a wake-up call last year," said Sen. Joan Bray, a St. Louis Democrat and sponsor of one bill in Missouri.

"When we found out the Department of Social Services had contracted with a company that moved its call center to India, we didn't like the idea that we were paying good Missouri tax dollars to employ people overseas."

Some 80 bills with anti-outsourcing goals are pending in at least 30 states across the United States.

"Washington may have won war in Afghanistan and neutralized Saddam in Iraq, but it won't be easy to tame the wild economic elephant called India," financial analyst Yogesh Arora said.

Even India's Prime Minister Atal Behari Vajpayee defended the trend of moving jobs from the West to India, saying it would eventually create more employment in the United States.

"The very process of liberalization, on which we have been lectured for so many years, has created competitive skills, which are available for utilization by businesses everywhere," Vajpayee said.

"Outsourcing is a natural consequence of this process," Vajpayee said in his opening speech Friday at the India Today Conclave in New Delhi.

"The world has spent the last decade trying to make sensible economics prevail over the temptation for short-term political gains. We should not now drive a reverse process."

Buoyed by hundreds of call centers handling thousands of queries each day, India's foreign exchange kitty has swelled beyond $1 billion.

David Shaffer, president of the Public Policy Institute, an Albany-based think tank, has warned that attempts by American lawmakers to introduce restrictive curbs on companies keen on outsourcing to countries like India could have a retributive effective in the long term.

"It's all a cover-up, frankly. They don't want you to realize that New York's problem isn't China or India. It's Albany. With its government-imposed high cost of doing business, New York state has lagged behind the nation's job growth for decades. In the current recession, we've (New York) lost jobs 1.7 times faster than the nation as a whole," Shaffer said in an article published New York Post.

"Fact is, we need to imitate India, not whine about it," Shaffer said.

The U.S. Ambassador to India David C. Mulford too demanded a fair share for American companies to access Indian market.

Mulford said at a food expo in New Delhi that the United States has been engaging the Indian government in the World Trade Organization framework to further open international markets and to mitigate trade distortions, particularly in agriculture.

The ambassador said that while the United States is one of the world's most open economies, India continued to be one of the most closed.

"In agriculture, India enjoyed an $857 million trade surplus with the United States in 2003. Over the past six years, U.S. agricultural exports to India have almost doubled to $309 million in 2003. However, given India's population, growing middle class, and robust economic growth this figure is too small," he said.

As of now, the stalemate between Washington and New Delhi continues. While the United States continues to press India for more market access, New Delhi has slammed a Senate bill that, if signed by the president, would ban outsourcing of government jobs outside United States.

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