NEWS: Indian BPOs unfazled by New Jersey's anti-outsourcing bill

["Frederick Noronha" <fred@bytesforall.org>]

Indian BPOs unfazed by New Jersey's anti-outsourcing bill (LEADS)

By Imran Qureshi, Indo-Asian News Service

Bangalore, Nov 26 (IANS) The burgeoning Indian business process 
outsourcing (BPO) sector does not seem too perturbed over a proposed 
bill in the U.S. state of New Jersey to block outsourcing to other 
countries, including India.  

Industry officials termed the bill as an "isolated" instance in a 
globalised business environment, in which outsourcing to India cuts 
costs, provides quality and improves efficiencies.  

Initially, eyebrows were raised in the IT industry following reports 
that Senator Shirley K. Tuner has introduced the bill in New Jersey 
to prevent outsourcing of government contracts to citizens outside 
the U.S. in a bid to prevent loss of jobs to foreign countries.  

"Moving of processes to India does not mean money so saved is saved 
or diverted to India. On the contrary, it saves and creates more 
money for U.S. companies to invest and create other jobs there. It 
is, actually, their economy that improves with our efficiencies," 
ICICIonesource president K. Ganesh told IANS.  

TransWorks CEO Prakash Gurbaxani added: "If at all it has any impact, 
it will be on two or three Indian BPO companies with contracts from 
governments in U.S. states. It is, largely, private U.S. companies 
that outsource work to India."  

Raju Bhatnagar, head of BPO at Cognizant Technology Solutions, said: 
"The lessons of the manufacturing sector are there for all to see. 
Ultimately, economic forces will play their part, even if it means 
over a period of time, to see that outsourcing to India is not 
affected."  

New Jersey-based Cognizant is also setting up a BPO unit here to 
exploit growing opportunities in the financial sector, by initially 
opening a 150-seater call centre-cum-back office process centre in 
the first quarter of 2003 -- January-March.  

Industry officials quote the example of Nike, which outsourced 
manufacturing of its shoes to Asia and reaped the benefits to record 
sales of $2 billion.  

"The prices of shoes went down and sales went up in the U.S. There is 
a huge benefit from outsourcing that private companies in the U.S. 
realise," said Ganesh.  

Gurbaxani added: "The perception that jobs are being lost existed 
when manufacturing shifted to Asian countries. But the same 
perception did not exist when software was outsourced because it was 
need-based.  

"Ultimately, competitive pressures will play their role. It is 
nothing to be perturbed about."  

Ganesh said jobs were not being cut in the U.S. to outsource. 
"Availability of people and high rates of attrition are critical 
factors that have led to outsourcing.  

"What Indian BPOs have provided in exchange is cost effectiveness, 
quality and productivity. It is efficiency that improves economy."  

The other factor, officials who did not want to be identified say, is 
that it is difficult to prevent outsourcing because unions in 
America, unlike Britain, are not strong in the services sector.  

"It appears more a political move now, but hard economics will 
ultimately benefit Indian companies," said an official of a BPO, 
requesting anonymity.  

"Don't forget that the U.S. is leading the globalisation process in 
the world. It can't afford to block its own progress. It is the 
bottom-line that matters and the private sector in the U.S. is strong 
enough to influence such decisions," said another official.  

As Wipro chairman Azim Premji told an International Data Corp. (IDC) 
meeting last week: "The fundamental truth is that outsourcing is no 
longer a desired choice but an absolute strategic necessity. Services 
and functions that can be done at greater efficiencies and 
effectiveness are best outsourced."  

Premji quoted the Nasscom-McKinsey report 2002, which predicts two 
million jobs that outsourcing centres in India will provide in six 
years. By 2008, the revenue predicted is around $24 billion, which 
will be three percent of India's gross domestic product (GDP).  

The growth rate achieved by the sector was 71 percent last year 
making it the fastest growing industry. In the last five years, more 
than 336 centres have come up in India.  

--Indo-Asian News Service  

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