The Hindu : Outsourcing could become U.S. election issue

Online edition of India's National Newspaper
Wednesday, Jan 07, 2004

Business

Business

Outsourcing could become U.S. election issue

By Our Special Correspondent

NEW DELHI JAN. 6. The leader of a U.S. Congressional delegation today advised Indian industry to invest in the U.S. to prevent outsourcing turning into an election issue even as the National Association of Software and Service Companies (Nasscom) today asserted that there was no need to worry over the backlash to BPO growth. The Nasscom President, Kiran Karnik, sought to allay fears over the legislation pending in several American States to ban outsourcing to other countries, describing these as `short term' problems.

Mr. Karnik said the contract of Tata Consultancy Services cancelled by the State of Indiana in the U.S. would be refloated and non-U.S. companies would be allowed to bid. Earlier, the contract had been cancelled due to the State Governor's decision not to allow contracts to be given out of the U.S. He felt economic sense would prevail in the long run as job losses in the U.S. were due to the economic downturn in that country and not outsourcing. Besides, the business process outsourcing (BPO) sector in this country was set to grow by 50 per cent in the current fiscal, he said. Earlier, the co-chairman of the Congressional caucus on India, Joseph Crowley, said the negative image of job losses had become associated with outsourcing to India and this could be taken advantage of in an election year. He said the federal Government could not stop State governments bringing in legislation banning business process outsourcing to other countries like India. He thus felt that Indian companies should invest in the U.S. as a counter to job loss in that country.

Addressing a meeting organised by the Confederation of Indian Industry (CII) and Nasscom, Mr. Crowley stressed the political nature of these protests in several States. As it was an election year, he said people did try to take advantage of this situation. Instead, he felt the effort should be to highlight the positives of outsourcing. This could be done through Indian companies creating jobs in the U.S. by investment and dispelling the negative notions of job associated with outsourcing.

Mr. Crowley said in reality outsourcing helped raise competitiveness and create more jobs by improving the bottomline of companies that are outsourcing.

Another member of the delegation, Democrat Senator John Cornyn, was also in favour of outsourcing, describing it as inevitable if U.S. companies were to save costs, become more competitive and prevent closures. He was a supporter of an expanded guest worker programme to enable foreign workers to come to the U.S. for a limited period. He had introduced legislation to establish such a programme last year.

Mr. Cornyn noted that the U.S. was simultaneously emerging from a period of slow economic growth and beginning an election year. As a result, there was an increase in protectionist and anti-free trade rhetoric, he felt. "These passions of the moment must be resisted,'' he said.

Mr. Cornyn felt technical and economic innovation was inevitable and should be embraced and adopted rather than feared and opposed. Political leaders should recognise what many in business have already realised — that the economies of the U.S. and India can work to support each other. But, he conceded that it could be difficult at times for politicians of any nationality to focus on the long-term benefits of trade and economic liberalisation when they were concentrating on upcoming elections.

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