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Home > Business > PTI > Report


US Senate passes law against outsourcing

T V Parasuram in Washington | January 24, 2004 02:36 IST
Last Updated: January 24, 2004 03:05 IST


In the first federal law against outsourcing, the US Senate on Thursday night passed a law barring doling out sub-contracts to India and other countries by American companies to cut costs.

The legal measure, originally sponsored by Republican Senator from Ohio George Voinovich and others, was included in a $328billion spending bill passed by the Senate.

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Under the measure, when the US federal government gives contracts to an American firm, the latter cannot subsequently give sub-contracts to a source outside the United States.

The measure avoids challenging the government's right to give projects to contractors. But what it does provide is that that contract cannot be sub-contracted out by the outsourcing mechanism to India or other countries like China or Russia to cut costs.

The provision is the first federal law that limits companies from performing contracted work outside the US ever since outsourcing became a potent political issue in the US a year ago. Business groups said the move would undercut the ability of US companies to compete with their overseas rivals.

Voinovich has been working on this bill for quite some time though companies having offshore BPO contracts have pointed out that such action benefits not only countries like India but as much or even more the American companies, which have to compete globally.

The Senate adopted the bill before it recessed but the document could not be sent to President George W Bush for signature because a companion house bill was slightly different. Under Congressional rules, a bill to be sent to the president for signature must be identical in both Houses.

Voinovich got over the problem by attaching it to the Treasury and Transportation Spending Bill, which prevented it from being knocked out in conference.

Analysts believe that if an Indian company starts an outfit in the US, it is as much entitled as any American company to bid for contracts or take any sub-contracts. The objection of the anti-outsourcing members is to jobs being exported abroad.

The BPO Controversy



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Number of User Comments: 11




Sub: Are US people scared of Indian Talent?

The US senate passed this law against outsourcing shows that the US people are in real worry of loosing the employment opportunities. But it is ...


Posted by Swapnil





Sub: US passes law against BPO

Can anyone tell, How much will this affect Indian Economy? Will this lead to close down of some of the BPO that are prevailing in ...


Posted by Prasad DN





Sub: Action against BPO welcome

This is good news for Americans. Excellent news. Not so good for Indians who have been basically been living on leftover jobs from American companies. ...


Posted by shivi





Sub: Open markets, closed markets

With current judgement passed by the senate it only proves that US is either trying to encash on the votes in the election season or ...


Posted by Ashish





Sub: American True Colours

America has shown its true colours again... It wants other countries to open up their resources etc. It even has exploited and depleted the resources ...


Posted by Sameer




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