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US experts play down outsourcing backlash

By BS Bureau in Bangalore
June 14, 2003 11:57 IST
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Is the "backlash" in the US and the UK against outsourcing to India largely a creation of the Indian media? The observations of two American executives attending the ITES-BPO summit would indicate so.

The backlash against India "is news to me", said Michel Janssen, president, supplier solutions, Everest group. He amplified that the issue of protest against outsourcing "is not new to my business" though India may be facing it for the first time.

Much the same sentiment was expressed by Kevin M Campbell, president and chief operating officer of Exult. Indians were making too much of it, he felt. "It will pass, go away; just stop talking about it."

The issue has, however, had an impact. Top business leaders in the developed countries have lately stopped talking about outsourcing, leaving communication on the issue to the number three or four in the respective organisations.

An indication of this was available during the recent visit of Intel chief executive officer Paul Otellini who steered clear of any reference to design and development work shifting to India and instead emphasised co-development.

National Association of Software and Service Companies for its part is willing to repeat to whoever in the listening range that the backlash will have nearly no impact on business. It remains very bullish on the industry.

Legislation in the US to block outsourcing to India, even if successful, would only affect government outsourcing, which accounts for less than 1 per cent of the global outsourcing revenue India earns.

However, several legislative initiatives in different states are already dead and such an initiative exists only in New Jersey. There it has cost the state nearly $960,000 to save a mere 12 jobs. The realisation is dawning that this is very costly.

Cut in the quota for US H1B visas will also not matter, as the quota for the year that is about to end has not been fully utilised.

Also, as these visas are issued for three plus three years, there is no question of any immediate impact of a cut in the yearly quota. The impact of any changes in the L1 visa regime will also be negligible.

Nasscom is dealing with the issue in a very low-key manner and would prefer to leave the lobbying for outsourcing to US corporations who need to outsource to maintain their own competitiveness.

Leading US companies such as GE and AIG, which find their Indian operations very productive would count among India's natural allies in this regard.

Indian government insiders recall the key role that Enron had played in muting Congressional protest against the Indian nuclear blasts in 1998.

Industry sources feel that India's greatest bet in tackling any outsourcing issue in the US is to keep strengthening its ties with US business.

For this, the aim should be to secure more and more outsourcing from US business. In fact, the more captive BPO centres US business has in India, the better it is for the latter as that increases the stake of US businesses in India.

Nasscom's strategy is to join the government in proposing that GATS (General Agreement of Trade Related Services) visas be introduced under the current Doha Round of trade negotiations.

This will keep work visas and immigration issues separate and make for smooth on-site deployment by Indian software companies.
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