Indian software industry targets US outsourcing bill

BANGALORE: India’s software industry association on Saturday criticised a United States Senate bill that imposes curbs on overseas outsourcing of government business, calling it an attack on free trade.

“We are dismayed to learn about the Bill in the US Senate that restricts offshoring of work contracted by the US government,” Kiran Karnik, president of the National Association of Software and Service Companies (NASSCOM), said in a statement.

Indian newspapers prominently displayed on their front pages the passage in the US Senate on Thursday a federal spending bill, which includes clauses restricting outsourcing. “The bill is yet to become law, and we hope that wiser counsel will prevail,” Karnik said. However, NASSCOM said the business impact of planned US restrictions on outsourcing would be “very small” as the share of US federal government contracts in Indian software exports was less than two percent. India’s software service industry and an accompanying sector that runs call centres and back-office work conducted over high-speed telecoms have been growing aggressively, triggering protectionist talk in the west. The industry’s exports, based on strong English language skills and cheaper wages, grossed $9.5 billion in the year to March 2003, and are expected to grow at least 26 percent in the current fiscal year to March 2004. While recent state-level bills in the US have been minor irritants for India, the federal bill this week in an election year for both United States and India caused unease between the two nations warming up as strategic partners.

Alarm bells have been sounded in the US over a potential loss of jobs in the services sector to India, while China is already seen as having taken a huge chunk of manufacturing jobs. On the Indian side, where a huge economy has become increasingly globally integrated due to a decade of reforms, fresh fears have arisen over whether Washington is unfair in trade. Karnik said India’s government had itself awarded computerization contracts for its income-tax department to US-based companies, raising a hint there was scope for retaliatory trade action. Bangalore-based companies like Nasdaq-listed Infosys Technologies Ltd and New York-listed Wipro Ltd have been among leading gainers from outsourcing by US Fortune 500 giants. Infosys CEO Kris Gopalakrishnan said in a statement his company had no US government work but that he would be monitoring the situation. —Reuters

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