Arun Jain of Polaris spent some days behind bars in Jakarta; the experience was not pleasant. His crime? There was a dispute between his company and an Indonesian bank about work it was doing for the bank. In India, it would be a civil dispute to be settled in court.

Kuala Lumpur Police rounded up residents of a housing estate, including many Indian software programmers, and locked them up. Their crime? The housing estate was suspected to harbour foreigners without visas. The programmers had visas; that did not save them from jail.

These incidents have been reported in this country as isolated instances of highhandedness. They may have been. But as one who has travelled all over South-east and East Asia, I can testify to local prejudices against Indians.

Some of the prejudices were well founded. Indians never smiled; South-East Asians smiled easily. Indians haggled like mad; so did Thais and Indonesians, but in a bantering, good-natured way. The Chinese are different from South-East Asians; but they do not think much of us either. Indians smell; east Asians do not.

Whether the prejudices were well founded or not, everyone who has travelled will testify that Indians have a certain, not very favourable image in the countries to our east. Nothing new in that; the west had its own stereotypes of India -- starving people, cow-worshippers, prone to violence etc. Strange gods like Ganesh, strange festivals like Holi. Really weird people.

So I was taken aback when, last year, a German said to me, "You Indians are really intelligent, aren't you?" First I thought he was making fun of me; then I remembered Germans do not do it. He was referring to our success in software.

It changed our image in the west. The Americans were pretty disdainful of us in the times of cold war. During the software boom, they developed a special taste for Indian programmers and imported them by the thousands. Today, America has more Indian software engineers than India.

But that reevaluation of prejudices was strictly western. The South-East Asians did not think we had suddenly become more intelligent; they thought that the crafty Indians had stolen a march over them.

Everywhere, computer classes sprang up. Government ministers presided over congregations of young people typing away at computers. Everyone wanted to be where we were; they just could not see what we had that they did not. They thought Indians were being used only because they were cheap.

Such sentiments are not confined to South-East Asia. When I was in the States two years ago, a Congressional Committee was going around taking hearings on visa regulations. In 2001-02, 136,000 Indian programmers got H-1B visas. American men were going and telling this committee that this influx of cheap labour had deprived them of their jobs.

That the IT companies regarded anyone over 40 as passé, and that American jobs were being lost to curry-eating kids. But at that time there was a raging shortage of programmers, Congressmen cared more for the software industry than for isolated white middle-aged programmers, and did little beyond requiring that US IT companies had to certify that they had looked for indigenous programmers and failed.

But the US -- and, to some extent, Britain -- are exceptional. The US had Reagan, Britain had Thatcher. They whipped trade unions, and introduced competition in the labour market. Not Western Europe; there trade unions rule the roost, jobs are reserved for natives when available, and there are no qualms about keeping out foreigners.

Last year, when I went to get a German visa, every young Indian applicant was being given a form letter denying him a visa, and saying that under German law, the embassy did not have to give a reason.

The visa regime is used not only to give preference to native over Indian programmers, but to favour one foreigner against another. Germany introduced a green card in 2000, ostensibly to attract Indian programmers. But in the first year, only 1600 out of 7000 green cards went to Indians; most of the rest went to East Europeans.

After the collapse of the Soviet Union, Germany acquired a hegemonic role in Europe. It has admitted millions of Poles, Croats and others from the east; it prefers them to Indians. Not necessarily perhaps for racial reasons; maybe East Europeans speak German and fit into the German society more readily. But the result is the same; few Indians managed to get in to work in Germany.

The Japanese Prime Minister made a pilgrimage to Bangalore in 2000 to attract Indian programmers; but Japanese companies have recruited and trained thousands of Chinese programmers, and some of them regularly take Chinese programmers across to Japan.

Geopolitical interests count in information technology as anywhere else. They erupt in crude highhandedness in Asian countries; elsewhere they work more subtly, but the effect is the same: the Indian programmer is being discriminated against.

The share in India's software exports of three countries that are relatively liberal towards Indian programmers, the US, Britain and Singapore, rose from 75 per cent in 2000-01 to 82 per cent in 2001-02. Which means that the share of the remaining countries fell from 25 per cent to 18 per cent. It fell for Japan, Germany and Switzerland amongst others.

I have found no awareness of this in the IT firms I have visited in the past year. They think of the US as their principal market; what happens elsewhere is only of marginal interest to them. I think the biggest firms -- Satyam, TCS, Infosys -- are aware of the need to diversify.

Satyam has set up an establishment in Shanghai, because it was a potential market it did not want to ignore. A big firm is also aware of the need to remain big and to grow; if that involves growing away from India, so be it. The visa regimes and other discriminatory practices mean that if Indian firms want to expand in the discriminating countries, they will have to employ locals. They have to multinationalise themselves.

The larger ones can and will; thousands of small firms cannot. When confronted with this problem, everyone in the industry mindlessly chants "moving up the value chain". But this is a mirage; there is no value chain to move up.

What Indian firms need to do is to acquire, codify and supply expertise that local firms elsewhere would take years to do, namely domain expertise.

It will not come unasked; they will have to go and extract it out of the work they do for their clients. And the quickest way to extract it would be to select the best potential Indian businesses, and to mine them for the special knowledge of their industries.

For their own sake, Indian IT firms should do more work for local clients -- and develop the technology to systematise and document specialist knowledge about their businesses.

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