The Hindu Business Line : BPO crackdown?

IT IS A little difficult to gauge the impact the US Senate's decision to ban outsourcing of government contracts to offshore locations will have on the business opportunities flowing into India. For, the restriction applies only to those jobs that the federal government may put on the block for competitive execution by the private sector. To the extent there are few contracts on offer (for execution by the private sector), the number of them that might have been outsourced to India will be fewer.

Having said that, there is little doubt that a climate of public opinion against outsourcing is sought to be created by politicians as they play the xenophobic card ahead of the Presidential polls. For quite some time now, there has been a spate of legislative initiatives at the State level. While some States have adopted a more direct approach such as imposing a condition that outsourced government contracts involve the employment of only US citizens or its permanent residents, a few others have resorted to more indirect methods to restrict BPO opportunities for Indian enterprises by making telemarketing or call centres functioning out of India somewhat onerous. The lesson from all this is quite simple: For all the loud noises that the US makes about a free global order in international trade, it has been the first to erect tariff and non-tariff walls of protection at the slightest threat to American jobs. It began with punitive trade measures against low-cost textile imports. It followed up with similar measures in steel and is now seeking to do the same in the case of services. If this is extended to imposing curbs on the grant of visas to Information Techonology professionals from India, it could have adverse consequences as well.

The fetters placed on India from realising its full potential in the outsourcing industry could not have come at a worse moment. The industry has been growing at an impressive rate in recent times. But it is yet quite small not only in relation to the overall global trade in services but also to that of the domestic IT industry. It is only when the industry has grown to a reasonable size that consumer interests in the originating countries begin to create a parallel pressure point in policy formulation. The backlash in the US is not so much a reaction to the industry's current achievements as a reflection of its potential to do harm in the future.

The outlook would depend on how successfully India is able to mobilise support both within the political establishment in the US and also consumers who stand to gain by way of cheaper access to a variety of services outsourced to India. Once the industry has acquired a growth momentum of its own, it would have built a sufficient constituency in the United States which would make it difficult for anybody to dismantle it through legislative fiats. The next few years are therefore crucial. The BPO industry and the Government must come together and craft appropriate counter measures to insulate the industry during this transition period.

More Stories on : Editorial | Outsourcing

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
BPO crackdown?

Urea prices: Why import parity makes better sense

Unhealthy silence

Intelligence and the corporation

The fractal-print of biotechnology

Are companies like governments?

Bank loans

Globalisation watch