Monday,
December 30, 2002
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Feature |
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Blocking calls to call
centres
Sumeet Chatterjee
THE
New Jersey Senate’s decision to pass a new Bill that seeks to ban
outsourcing of government contracts overseas, particularly to countries
like India, has been received with caution by Indian IT companies.
A section of the
high-profile technology industry feels the promulgation of the law would
not have an impact on profitability of Indian firms as very few
companies undertake outsourcing activities for public enterprises in New
Jersey.
Others, however, fear it
may set a precedent and spread to other US states in the days ahead,
casting a shadow over technology outsourcing, the trump card for India’s
technology sector.
"So far as the
passage of the Bill by New Jersey Senate is concerned, we don’t see
any fallout of this on the performance of the Indian companies,"
saya Kiran Karnik, president of the National Association of Software and
Service Companies (Nasscom).
"We have not come
across any Indian company that is really doing any work out there. So it’s
really very inconsequential to us. But we will begin to have some
concerns if it spreads to other states in the US," Karnik told IANS.
The New Jersey Senate
unanimously cleared a new Bill, which prevents public enterprises in the
state from outsourcing work, specifically to India. Senator Shirley
Turner had proposed the Bill earlier this year.
The Bill has to be cleared
by the state assembly now, after which it will be sent to the governor
for approval. If the governor signs it, the Bill will become law.
Analysts say the Bill
prohibits public enterprises from shifting their call centres abroad for
"cheap labour" with a view to creating more jobs for Americans
as the unemployment rate in the U.S. soars.
Industry players here say
other US state governments may also use tough legislation in the months
ahead to protect jobs, badly affecting India’s booming technology
outsourcing business in the long run.
"This may see many
state governments in the US and eventually even the federal government
going in for protectionist legislation," said the marketing manager
of a leading New Delhi-based technology solutions provider.
"If that happens, we
will have to rewrite our business expectations. This definitely comes as
a setback for the country’s growing IT industry," said the
official, who didn’t want to be named.
India’s vast pool of
English-speaking and cheaper manpower, educational system and training
programmes have helped transform the country into a global outsourcing
superpower in the last few years.
India’s software exports
grew 29 per cent to $7.5 billion in the past year to March 31, 2002, of
which some 60 per cent went to the USA.
The country’s rapidly
growing business process outsourcing (BPO) industry has virtually turned
it into an electronic housekeeper to the world, taking care of a host of
routine activities for multinational giants.
More than a quarter of
Fortune 500 companies such as General Electric, American Express,
British Airways,
HSBC and Citibank are shifting their back office operations to India.
The BPO industry in India
depends to a large extent on the US These jobs are mainly coming to
India as it is much cheaper to process activities such as human
resources, finance and accounting, supply chain management and customer
care here.
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