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India's IT industry worried by new woes

April 22, 2003 11:39 IST

Walloped first by the dot-com meltdown and then by the September 11 attacks, India's software industry is now discovering new woes -- visa restrictions and police raids overseas that some see as shades of protectionism.

Several recent incidents, including one in which Malaysian police detained 270 Indian information technology workers on suspicion of being illegal workers, have shaken an industry that was looking at steady growth, as overseas firms move software work offshore to benefit from India's low-cost engineers.

Coming against the backdrop of a prolonged slowdown in the United States economy, which takes more than 60 percent of India's nearly $10 billion in software and service exports, the incidents raised a spectre of protectionism in the industry.

Some speculate political lobbies, or unions fearing job losses, may have been behind them. Others think Indians were just caught up in routine police action against illegal workers.

But with grumblings that India is swiping white-collar jobs from western nations, industry officials say low-skilled jobs in the industry have become politically sensitive.

"This is an economic issue which has become a social situation," Atul Takle, spokesman for India's largest software exporter, privately held Tata Consultancy Services, said.

British telecom group BT Group Plc is having trouble with unions over its Indian call centres that will eventually employ 2,200 people. In New Jersey, a lone US legislator is trying to stop the government from outsourcing jobs abroad.

Oracle, the world's No 2 software company, last year denied it was slashing headcount in the United States while hiring in India, where it plans to double staff to 4,000 over four years.

Tougher checks

Indian software service companies use a mix of 'onsite' workers located at client premises overseas with India-based 'offshore' workers who operate over high-speed telecom networks.

Industry officials say protectionism or not, Indian IT workers are facing more visa curbs in the United States and Europe, particularly security checks that intensified after the terror attacks on New York and Washington on September 11, 2001.

Kalpa Shah, chief executive of privately held software firm NetGalactic, said that one of her workers, a Muslim, had his US visa revoked and another had his visa rejected twice despite seven years of credible work.

Industry officials say an express programme that helped firms to get visas for their workers without physical interviews is also being scaled down.

"They have made everything much more strict," said Shah.

Despite such problems, business is good in the industry.

India's software exports are estimated to have grown by nearly 30 percent in the year ended March to nearly $10 billion. This is below the heady 50 per cent growth rates of the 1990s but is still strong because of demand for software that helps corporate productivity.

India's leading listed software companies, Infosys Technologies and Wipro hired more than 3,000 workers each in the first three quarters of the fiscal year ended March, showing robust demand for workers.

"In high-skilled categories, there is still a short supply," said Laxman Badiga, Wipro's head of talent and staffing.

Feel-good factor gone

Indian workers were hit by layoffs in the West two years ago. Of late, political security is a bigger problem.

Industry officials say Indian firms have seen new hiring opportunities since the September 11 attacks because many western-based Indians want to return home to safer jobs and to avoid embarrassing security checks and "racial profiling".

Partha Iyengar, vice-president at the Indian arm of industry researcher Gartner Group, said Indian firms were aggressively recruiting managers and engineers comfortable with western customers but longing for their home country.

"At the emotional level, the feel-good factor has gone out of the US," Iyengar said. "There is uncertainty over the economy and backlash over jobs, while India is still in a growth mode".

Iyengar said western authorities who overlooked small technical details on duration or types of business visas in the talent-hungry 1990s were now looking harder at the papers.

"This is a political issue driven by economics," said Ravi Ramu, chief financial officer of software and back-office services firm MphasiS BFL Ltd. "As the Indian industry scales up its profile, these issues are likely to come up more and more."

Wipro's Badiga said the perception of job losses in the West, especially in back-office work, was a politically sensitive issue Indian industry has to learn to cope with.

"Once a perception starts, it is difficult to change that. Noise levels create problems," Badiga said.

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