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India to raise issue of outsourcing curbs with Obama

John Ribeiro | Oct. 29, 2010
The country's outsourcing industry is disturbed by protectionist moves in the U.S.

BANGALORE, 29 OCTOBER 2010 - Issues facing India's outsourcing industry, such as an increase in U.S. visa fees, will figure in intergovernmental talks during U.S. President Barack Obama's visit to the country in early November, India's minister of state for communications and information technology, Sachin Pilot, said Thursday in Bangalore on the sidelines of an event.

Indian outsourcers should also reduce their dependence on a single market and diversify to other markets worldwide, Pilot said during a speech at an IT event hosted by the local state government. The U.S. accounted for 63 percent of the revenue of Indian outsourcers, he added. India should attempt to repeat its success in software outsourcing in the area of hardware manufacturing as well, while also focusing on niche software services, Pilot said.

Indian outsourcers are, however, worried because U.S. unemployment and generating jobs in the country are key issues in next Tuesday's midterm elections.

Indian outsourcers have been disturbed by recent moves in the U.S. including an executive order by Ohio Governor Ted Strickland that banned the expenditure of public funds for offshore purposes.

Earlier, Obama signed into law a US$600 million bill for increased surveillance of the U.S.-Mexican border to prevent illegal immigrants. The funds for these measures are to be raised from an increase in visa fees paid by tech workers brought into the country by companies with more than 50 staff, and in which more than 50 percent of the staff are on such visas.

At a White House media briefing on Wednesday in connection with Obama's India visit, officials tried to soften the outsourcing issue, emphasizing instead that Indian investment already supports 57,000 jobs in the U.S.

Large Indian outsourcers such as Tata Consultancy Services and Infosys Technologies have reported double-digit revenue growth in the quarter that ended Sept. 30, indicating that business in the U.S., their key market, is growing.

Infosys Technologies CEO S. Gopalakrishnan said Thursday at a speech at the event that the IT and BPO (business process outsourcing) industries in India would this year surpass earlier growth forecasts of between 13 percent and 15 percent. The industry grew by 5 percent last year.

Indian outsourcers have tried after the recession to increase revenue from Europe and other markets and to reduce their exposure to the U.S. market. But the austerity measures in some European countries are expected to slow down the transition, according to analysts.

During his trip to India, Obama is not scheduled to visit Bangalore, which is considered to be the outsourcing hub of India.

 

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