The US state of Ohio has banned outsourcing of government IT projects to offshore destinations including India.
The move would hit Indian companies whose revenues from the US account for more than 50 per cent of their total revenues. Many Indian companies had shifted focus to the government sector following the recession and the move may likely end up throwing a spanner in the new strategy.
According to Kris Gopalakrishnan, CEO of India’s second largest IT company Infosys, the company was concerned by the move.
In a statement to NDTV, Gopalakrishnan, said the move amounted to putting up a protectionist barrier.
Unemployment has reached a record high of 9.6 per cent in the US sparking concerns about the pace of recovery in the largest economy in the world.
US president Barack Obama had only last moth cleared a new law proposing a steep hike in certain categories of H-1B and L-1 visa fees.
The Indian government had threatened to take the US to the World Trade Organization (WTO) over the new law on grounds of unfair targeting of Indian companies.
Ohio governor Ted Strickland, in his order, said outsourcing, represented a threat to jobs and also posed IT security risk. According to the website computerworld.com Strickland, in his order, said the purchase of offshore services “has unacceptable business consequences”.
”There are pervasive service delivery problems with offshore providers, including dissatisfaction with the quality of their services and with the fact that services are being provided offshore,” Further he wrote in the order, “It is difficult and expensive to detect illegal activity and contract violations and to pursue legal recourse for poor performance or data security violations.”
He said that outsourcing jobs did not reflect Ohio values.
The Indian IT industry already reeling under the impact of the blow delivered by the Obama administration significantly increasing its visa fees is likely to be badly hit by the latest development.
The move comes in the wake of a workers’ union in West Virginia
filing a lawsuit against state department for outsourcng US jobs.
The Indian outsourcing industry, a giant $50-billion operation has shared a win-win relationship with American corporations that save billions of dollars by outsourcing work to low-cost countries like India.
Indian business process outsourcing on its part makes neat profits from the arrangement.
The BPO industry in India directly or indirectly engages around 3 million people.
Source:http://www.domain-b.com/infotech/itnews/20100908_ohio_bans.html
