Here's how: In the 1990s, the outsourcing of chips, laptops, and other manufactured high-tech components to Taiwan and China lowered the price of computer and telecommunications equipment, stimulating an IT boom as these goods became available to more companies and individuals. Outsourcing software to India may well play a similar role -- generating growth by making cheap complex software available to millions more individuals and businesses, especially small businesses.
It's already happening. While lower-level software writing jobs migrate from expensive Silicon Valley to lower-cost Bangalore, there is a growing shortage of American programmers who have the skills to design, customize, and manage complex IT packages. Corporate America is more and more involved with its customers who demand a greater role in designing their own products and a positive experience in using them. Programmers who really know companies and can customize products and services for their customers will be in greater demand in the future. So will programmers who can combine this role with managing programmers around the world in developing software that implements this strategy.
Washington can help. Making superfast broadband available to every American is the sine qua non of moving to the next level of the IT evolution. Policymakers should create whatever it takes -- tax credits, deregulation, subsidies for homeland security measures -- to make that happen.
Retraining programmers who have lost their jobs to Indian software writers is also important. The Labor Dept.'s Trade Adjustment Assistance program helps workers who have lost jobs to foreign competition. But it applies only to manufacturing. Service workers, such as programmers, aren't covered. Congress should change the law immediately.
In the '70s, people predicted that OPEC would buy the world and run it. That didn't come to pass. In the '80s, Japan was said to be poised to dominate the U.S. That didn't happen, either. Now there are voices warning that Asia will surpass the U.S. in knowledge industries. There is that chance. But if programmers adapt and evolve, if Washington promotes broadband, and if the economy stays flexible and entrepreneurial, America won't lose out this time, either.