M A I N   N E W S

Ohio’s outsourcing ban leaves IT giants queasy 
Shubhadeep Choudhury/TNS

Bangalore, September 8
Close on the heels of raising visa fees by the USA for software workers from India, the Indian IT industry - which generates most of its revenues from the US - received another blow when the Governor of Ohio banned outsourcing of government IT and back office projects to offshore locations such as India.

“We are concerned with the recent news from the US about banning offshore outsourcing by Ohio State government departments”, Kris Gopalkrishnan, CEO of IT giant Infosys, said in a statement that reflected the industry’s apprehension about the US state’s step.

Gopalkrishnan indicated that Infosys was heading towards creating a delivery system in the US itself to handle works pertaining to the US. This will safeguard the company against further protectionist measures that the US might unleash to fight the rising unemployment rate there.“Infosys’s initiative in the public services sector is focused on creating a domestic delivery centre in the US, hence this should not be affected”, Gopalkrishnan said.

Ohio Governor Ted Strickland, a Democrat, recently prohibited state agencies from hiring any firm that sends work offshore. In his order, Strickland said the purchase of offshore services “has unacceptable business consequences” and among them were “unacceptable data security, and thus privacy and identity theft risks”.

Taking strong exception to the order, Nasscom, the association of Indian IT industry, said Strickland’s order reeked of discrimination. Nasscom also threatened to take legal action against the order.

“It is imperative that the focus on free trade remains strong, but instances like Senator Schumer’s Borders Security Bill and the Ohio State ban on outsourcing only reinforces our stand on discrimination”, Nasscom said.

The statement added that since international trade is a federal subject, Nasscom will examine the legality of such a bill being passed by a state government (of Ohio).

“While the public sector represents a small fraction in the overall demand for offshored services, it does represent a future focus area”, Nasscom said.

Nasscom is leading a delegation to the US later this month and will be taking the issue up with the officials concerned there. It will also seek support from Anand Sharma, Minister for Industry and Commerce, who is also visiting the US at the same time, to address this issue with the US authorities.

Interestingly, Strickland had himself wooed offshore companies to his state. In 2007, top Indian IT company TCS said it would build its North American delivery centre in Milford, Ohio, after the state offered about $19 million in tax credits and other incentives. White House took note of Strickland’s deal with TCS and the Ohio Governor was among 16 persons seated at the head table for a State Department luncheon organised for Prime Minister Manmohan Singh. Others with Strickland included US Secretary of State Hillary Clinton.

TCS has 400 employees at its Ohio delivery centre, an increase of a 100 workers from about a year ago.