The Hindu Business Line : Catching the eye

US-based companies that hadn't considered sending work offshore are now thinking about India. The backlash in the US against this practice is actually giving India much-needed, but free, publicity.

DURING his campaign in November 1999, a television interviewer asked George Bush whether he could name the Indian Prime Minister. Bush could not. The Americans nevertheless excused him for his poor GK and elected him President.

Ironically enough, India will figure in prominently in Bush's electoral rhetoric this year, as he just can't afford to care less about the country. Blame it on outsourcing. India's vast army of techies and young call centre agents have become a key election issue in the US as they are being accused of taking away jobs from Americans.

Many States in the US are enacting laws to stop outsourcing, and the Federal Government too has introduced a measure that bars sending contracts overseas.

This backlash against outsourcing was something the Indian technology and back office processing industry had not experienced before. Even in the post dotcom burst phase, the industry kept getting business. In fact, it was this slowdown that accentuated the need for more sending more work offshore.

Resentment began to brew in the US as jobless Americans saw more work flowing to India.

Then it snowballed into a major anti-outsourcing movement across the US, India's largest market for its technology services.

Since such anti-outsourcing Bills cannot stop private companies from sending work abroad, Indian companies are not unduly worried about the future. US state and federal government contracts account for only about two per cent of India's software and service exports. However, the issue of outsourcing is still generating interesting angles.

One of them is the fact that India's software and BPO firms have had to change their marketing tactics as the backlash built up.

The National Association of Software and Service Companies (Nasscom) has started talking more about the virtues of outsourcing work to India than how strong Indian companies have become. Or how beneficial it is for the US economy to outsource work and what kind of spending Indian techies do when they work in the US.

Companies are also avoiding hype. "The market is very volatile right now, so we do not want any hype," says an official of a Delhi-based software firm.

He says outsourcing contracts are long-term in nature and more work will flow to India, but "why talk about it if it proves counter-productive, when we know that is an election year in the US."

He points out that the situation has been made worse as it is the first time white-collar jobs are being lost in a major way. "These are highly paid, highly talented and highly educated people who represent what others aspire for. When such people lose their jobs, the impact is greater," he says.

`Blessing in disguise'

But some find the din over outsourcing has come as a blessing in disguise.

They think that all the negative publicity about India and outsourcing is working like an awareness campaign for the country's prowess in information technology.

Says Vineet Narang, Vice-President, Strategic Planning and Business Development, FCS Software Solutions: "It is good for Indian companies as awareness is increasing among smaller US software companies about the advantages of offshoring work to Indian companies." Narang says this is particularly helping small and medium companies that cannot afford to undertake large marketing campaigns in the US.

He claims that FCS Software has been able to identify about 5,000 prospective clients who now know about India and Indian companies. "We are now in the process of tapping these companies for possible business alliance," Narang says.

Outsourcing contracts come after months-long discussions and pilots since the awareness about small Indian software firms is zilch in the US.

"One of the companies for which we are working observed our processes and strengths for nearly six months before signing on the dotted line.

They even held intense interaction with our team, which included both informal chatting and professional discussion to gauge their strengths and weaknesses." This is where the brouhaha over outsourcing helps.

Less said the better

However, Nasscom believes that it is better to leave the issue of outsourcing for the time being, and talk less about it.

The association feels that giving more publicity to the issue would set off a chain of negative reactions, which will be counter-productive.

Another interesting twist in the tale of outsourcing is that the US has started to ask for a quid-pro-quo from India.

Recently, top US government officials such as the Secretary of State, Colin Powell, and the Trade Representative, Robert Zoellick, have stated that India should carry out more trade reforms that would offset job losses in the US. Powell said at a joint press conference in New Delhi recently that just as the US has outsourced jobs to India, Americans also have opportunities to service Indian needs.

What the US implies is that India must open up its economy more. It is reported in the media that the US wants India to further liberalise the financial sector, provide market access in agriculture and to let US legal professionals enter the Indian scene.

The US also wants India to enact strong intellectual property laws.

Whether India accedes to these demands is something that remains to be seen. After all, it is an election year here too.

Picture by G.R.N. Somashekar

gaurav@thehindu.co.in

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