An article about India and concerns about U.S. outsourcing in this week’s Newsweek is relevant to our on going discussion of Rising Above the Gathering Storm and U.S. “competitiveness.” It is titled, “Outsourcing: Silicon Valley East Americans once feared their jobs would be shipped to India, but the backlash was overdone. Now everybody’s winning,” and can be found here. Here is an excerpt:

Not long ago, what seemed most possible was that India would steal the jobs of American workers. But as George W. Bush visits there this week, he’ll find a maturing economy that is no longer all about call centers and basic tech support. Now big American investment banks and drugmakers are joining tech firms on the passage to India. R&D centers are springing up so fast that there’s now a shortage of Indian engineers. And the stigma of outsourcing jobs to India is disappearing. American companies once afraid to put their names on the doors of their Indian offices now issue press releases touting their latest investments there. “American firms have gotten over their anxiety about India,” says financial-services consultant Harrell Smith of Celent Communications. “Now the new anxiety is if you’re not in India.”

What happened to the outsourcing backlash? It has been muted by the fact that India didn’t suck Silicon Valley dry after all. Actually, U.S. tech employment is growing. There are 17 percent more tech workers in the United States today than back in the bubble days of 1999, says a new study by the Association for Computing Machinery. And the Bureau of Labor Statistics predicts that the U.S. economy will add 1 million tech jobs over the next decade, a 30 percent increase. “Everyone was worried about the offshoring bogeyman,” says Moshe Vardi, an author of the ACM study. “But the big whoosh of jobs to India never happened.” Indeed, that gush slowed to a steady stream once American companies realized it’s tough to set up shop in a country with bad roads and a patchy power grid. Lately, American consulting firms that once predicted runaway growth in outsourcing to India have been slashing their estimates by half or more. Now American companies are hanging on to the high-skilled work that requires face-to-face interaction, while everything that can be done “over the wire” gets shipped offshore.