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Prudential Insurance to shift 1,000 jobs to India
June 04, 2003 20:48 IST
Despite increasing discontent in the United States and Britain over outsourcing to India, British insurance company Prudential plans to shift a third of its remaining 3,000 customer-service jobs to Mumbai and save an estimated £16 million a year, a report said on Wednesday.
Prudential selected Mumbai over rival locations in east Europe, Asia and Ireland because of lower hiring costs but, as also because "the infrastructure and potential for savings and productivity gains made India a winner," said Philip Broadley, the company's finance director.
The move comes as British Communication Workers' Union issued a warning this week of strikes against BT, the telecommunications giant, over its Indian plans.
Similar moves by other companies in the US and the UK to low-cost offshore centres are now gaining international political attention, The Financial Times, London, reported on Wednesday.
US unions and politicians are also launching campaigns to protect jobs.
Unemployment in the US IT sector, now in its third year of downturn, hit 5.2 per cent last year, up from 3.7 per cent in 2000. Giga Information Group, an IT researcher, said that by 2015, a cumulative total of more than 472,000 IT jobs will be moved from the US to overseas locations, up from about 27,000 in 2000.
The "Great Tech Job Exodus", a campaign to stem the export of technology jobs to low-cost centres, was recently launched by the Washington Alliance of Technology Workers based in Seattle, the hometown for Microsoft, the world's largest software company.
Last month, legislation was introduced in the US Congress that would restrict foreign companies' ability to transfer Indian workers to their subsidiaries in the US.
The transfers are said to violate the terms of special visas known as L-1, which are supposed to be used in a limited way for intra-company transfers.
Lawmakers in four US states have also introduced legislation that would deny government contracts to companies that choose to do the work abroad.
The proposed legislation is among the first signs of a backlash against the loss of once high-paying jobs, the daily said.
Technology companies acknowledge that they face a struggle this year in persuading Congress to maintain the high numbers of foreign technology workers allowed to enter the US on H-1B visas for people with specialist skills.
Under lobbying from the industry, Congress in the 1990s raised the annual limit to 195,000 workers, but that will fall to 65,000 next year unless Congress acts to extend the higher quota.
India's business process outsourcing, still a small part of its $10-billion IT services sector, is forecast to grow for a third consecutive year at over 60 per cent.
Foreign clients may initially have turned to India because of cheaper labour costs of at least 40 per cent. But most have ramped up their relationship with their Indian technology partners because of productivity gains.
US companies have saved nearly 8 billion dollars in the four years to 2002 by outsourcing to India, and the benefits in terms of productivity and competitiveness as well as savings are rising according to the National Association of Software and Service Companies (Nasscom).
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