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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | JUNE 6, 2003 NEWS ANALYSIS A New Battle Over Offshore Outsourcing In the latest escalation of the debate about U.S. outfits' use of foreign programmers, legislators say India is stealing American jobs
The momentum against the export of white-collar U.S. jobs has been building for months. Congress in early June began considering bills to close an immigration-law loophole where foreigners can service U.S. clients using guest worker visas. Representative Nancy L. Johnson (R-Conn.) has asked that large insurance companies disclose how much of their IT work is being done by foreign workers in the U.S. At the state level, legislatures in Maryland, Washington, Connecticut, Missouri, and New Jersey are considering laws banning outsourcing of government tech-services contracts to low-wage developing countries. Even if they don't pass, though, they might make a U.S. company think twice before outsourcing more work to India and elsewhere. HIRING LOCALLY. The Indians are fighting back by taking the moral high ground on free trade. N. Narayana Murthy, chairman of the premier Indian software company Infosys Technologies (INFY ), points out that India opened its markets to U.S. consumer goods and services, so it's unfair for Washington to erect protectionist barriers. "When you have these kinds of noises, it creates the impression that you preach these things when it suits you,'' he says. India's software association, Nasscom, has launched a major lobbying effort in Washington with help from U.S. public relations firm Hill & Knowlton, while New Delhi has appointed a representative in its embassy there as part of India's campaign against the protectionist wave. They are talking up India's software prowess, with the goal of convincing Americans that both countries gain when they cooperate. Nasscom Vice-President Sunil Mehta argues that while India sells $6.75 billion worth of software services to the U.S., the industry contributes more than twice as much to the American economy by way of hardware and software purchases, customer savings, and U.S. taxes paid by Indian workers. "The Indian IT industry is making U.S. companies globally competitive,'' Mehta says. The industry also argues that it's actually creating jobs, not stealing them. As they expand into the higher-end tech-consulting business, India's top three IT companies, Wipro (WIT ) Tata Consultancy Services, and Infosys, are hiring more U.S.-based marketing and consulting executives. Nasscom claims Indian IT has been especially kind to New Jersey, having created 1,600 jobs there in the past four years. Of course, as the Indians admit, if they hire too many high-priced American workers, they could erode their cost advantage. "THE INDIA SOLUTION." Indian executives are betting that simple economics ultimately will prevail. Indian software services deliver cost savings of more than 60% to U.S. companies, says C. Srinivasan, who heads offshore operations in India for Electronic Data Systems (EDS ), the consulting and outsourcing company based in Plano, Tex., which plans to employ 2,500 in India by yearend. And despite the potential political heat in the U.S., he expects the outsourcing trend to continue. "In the next three to five years, the India solution will be a critical part of every portfolio,'' he says. As long as the U.S. IT industry remains in the doldrums, New Delhi will come up against U.S. protectionism. U.S. Rep. Jay Inslee (D-Wash.), who supports India's free-trade argument, says the politically charged issue won't be resolved anytime soon. "You'll hear an ongoing debate for the next decade,'' he says. India's new tech powerhouses better gird themselves for a long fight.  By Manjeet Kripalani and Bruce Einhorn in Bangalore, with Paul Magnusson in Washington Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | JUNE |
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