The Hindu Business Line : It's for US cos to resolve outsourcing outcry: Karnik

Mr Benoit Prefontain, Senior Counsellor, Canadian High Commission, Mr K.L. Balasubramanium, General Manager, Hummingbird Asia, and Mr Kiran Karnik, President, Nasscom, at the `iTECH 2004' in Hyderabad on Monday. -- A. Roy Chowdhury

Hyderabad Jan. 12

THE President of National Association of Software and Services Companies (Nasscom), Mr Kiran Karnik, on Monday said that there would be no concrete impact of the outsourcing backlash on the Indian IT industry.

"We are not worried, but are concerned about it because these developments are in the backdrop of an election year in the US," Mr Karnik said addressing a press conference on the sidelines of the two-day Nasscom Summit iTECH 2004.

Dispelling fears on outsourcing, the Nasscom President said that 85 per cent of the job losses in the US were in fact in the manufacturing sector rather than in the IT sector. This matter of outsourcing was not an Indo-US issue but a political one. The outsourcing model had been tried and tested there for 50 years and it was up to the US companies who espoused this outsourcing model to take it up and resolve it.

Industry watchers were of the opinion that this matter would not affect business. As the economy turned the corner, the situation improved in the US and job market began to pick up, the outsourcing issue would simply fade away, he said.

Referring to the McKinsey report which showed that for every dollar outsourced, $1.47 went back to the country (US), and describing the outsourcing as a win-win situation, Mr Karnik was confident that the IT industry was on course to achieve export targets of $12 billion for this fiscal ended March 31, 2004.

This compares well with the exports of $9.5 billion recorded as on March 31, 2003. These projections include that of exports from business process outsourcing (BPO) services of about $3.6 billion compared to $2.5 billion in March 2003.

With regards to reports about margins and pressures on them, Mr Karnik said the pressure had decreased but over the long-term margins may come down from 30 per cent now to about 20 per cent and later to possibly even 15-16 per cent.

The Nasscom was in favour of Government creating a special fund for IT companies that would enable them file for patents. Parleys were on with the Government to establish such a fund that would complement the work done by the Product Forum to facilitate grater interaction.

The Nasscom, Mr Kanik said, was working towards creating a professional services category visas that will add to the business and job visa categories that will facilitate smooth movement of professionals.

Through Government, it was planning to take up the matter of smooth movement of professionals with the World Trade Organisation.

Speaking at the inaugural session of the theme, `Strategic leadership for sustaining growth', Mr Jerry Rao, Vice-Chairman of Nasscom, and Chairman and CEO of Mphasis BFL Ltd, said the only way to go global was to have leaders drown from all parts of the world.

They would bring in a multicultural experience as also different strategic perspective that would help sustain the growth in the global market place.

The Chairman of Satyam Computer, Mr Ramalinga Raju, said that in a knowledge-driven industry like IT, the only way forward was to have right leaders drawn from a wide range of expertise.