The Hindu Business Line : Robust growth despite BPO backlash

INDIAN software and service industry braved rising intolerance in the US, its largest market, against outsourcing during 2003 and continued to grow as global corporations moved more work offshore to benefit from the country's low cost and quality.

The domestic information technology (IT) industry also saw robust growth in 2003 as companies and government took to computerisation with a vengeance, sending sales of personal computers, networking equipment and software such as ERP to new highs.

Throughout 2003, the country's software industry has had to adopt a stance that is both offensive as well as defensive as many American politicians tried to discourage outsourcing through legal means.

A number of States in the US such as New Jersey introduced Bills that sought to curtail outsourcing to countries such as India in order to protect local jobs.

A Colorado politician introduced a Bill to stop the H1-B visa programme. Indiana, another State, threw out a $ 15-million contract with Tata Consultancy Services. But more work moved to India.

And, so far, none of the Bills or plans by US politicians to check offshoring have become a law nor a practice as Indian software industry carried out a silent but effective lobbying in the US against such tactics.

Nasscom, the software industry association, spearheaded the campaign against the backlash, and towards the end of the year, Forbes magazine chose the Nasscom President, Mr Kiran Karnik, as the Face of the Year for his fight to protect the Indian IT industry.

During the year, the US also lowered the cap on H1-B visas during the year to 65,000 from 1,95,000, but the software industry does not see any impact on its prospects because of this move.

The reason: as many as four lakh Indian IT professionals currently hold H1-B visas.

Another worry for the software and service exporters during the year has been the steady appreciation of the rupee against the US dollar.

The Business Process Outsourcing (BPO) was the most high profit sector in the IT industry during the year. Thousands of jobs were created by BPO firms as there was no dearth of business.

The year also saw some issues in the BPO industry coming to the fore when Dell and Lehman Brothers moved some of their work back to the US from India, apparently due to lack of quality.

Some companies that hit the headlines during the year were i-flex, TCS, and iGate Capital.

In the beginning of the year, iFlex found itself at the wrong end of the Dutch law when some of its employees were detained in the Netherlands for alleged visa irregularities.

TCS became the first Indian software firm to cross the $ 1-billion revenue mark. iGate Global Solutions was in the news when it appointed Mr Phaneesh Murthy, who had quit Infosys after a sexual harassment case was filed against him, as its CEO in July.

Towards the end of the year, HCL Technologies and Perot Systems parted ways in the joint venture, HCL Perot. HCL Tech sold its stake in the company to Perot Systems for $ 105.3 million.

NIIT decided to split itself into two companies, one focussing on computer education and the other, NIIT Technologies, on software business.

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