Software Success Has India Worried

Some of the early messages at this group had to do with offshore
outsourcing.  I thought this might be of interest....

Lowell





> 
> Message: 1
>    Date: Thu, 13 Feb 2003 12:38:18 -0700
>    From: "Turpin, Jay" <[email protected]>
> Subject: Software Success Has India Worried
> 
> All,
> 
> At the last Phoenix XP User Group meeting, we briefly 
> discussed the impact of outsourcing for US programmers. Sally 
> Rudolph forwarded this article from the New York Times 
> concerning outsourcing. Enjoy!!!
> 
> Jay
> 
> ------------------------------------------------------------
> 
> Software Success Has India Worried
> 
> Namas Bhojani for The New York Times
> A crowd lined up last December to apply for jobs at a call center in 
> Bangalore, India. The software and services industry has been growing 
> robustly despite the broader slowdown in technology spending. 
> By SARITHA RAI 
> http://www.nytimes.com/2003/02/13/business/worldbusiness/13RUPE.html
> 
> BOMBAY, Feb. 12 - Is the United States going to start turning 
> its back 
> on outsourcing, the lifeblood of India's software and 
> services industry?
> 
> The global economic downturn and possible war with Iraq are, 
> of course, 
> big concerns for industry executives, who are gathered here this week 
> for an annual industry conference to meet with analysts, consultants 
> and the chief information officers from American corporations, their 
> most important customers. But the growing threat of a political 
> reaction against outsourcing is the worry dominating the discussion.
> 
> So far, the only concrete signs of a reaction are in the 
> public sector. 
> After the eFunds Corporation of Scottsdale, Ariz., a contractor hired 
> by the State of New Jersey to manage a welfare and food-stamp 
> program, 
> moved its customer-service operations to Bombay from Wisconsin, a New 
> Jersey legislator, Shirley K. Turner, introduced a bill that would 
> require that workers hired under state contracts be American citizens 
> or legal aliens or they occupy some specialty niche that American 
> workers cannot be found to fill. " `I say it's time to bring 'em back 
> from Bombay,' Senator Turner said of the client service jobs 
> currently 
> based in India," a news release stated.
> 
> Connecticut, Maryland, Wisconsin, and Missouri have also begun 
> considering such laws.
> 
> Though public-sector work directly accounts for only a tiny part of 
> India's software and services exports to the United States, 
> executives 
> here are concerned about a chilling effect, with American customers 
> reluctant to send work overseas lest it complicate dealings with 
> government bodies.
> 
> The $10 billion software and services industry is hugely important to 
> India. It has so far grown robustly despite the broader slowdown in 
> technology spending, as more Western companies, especially American 
> ones, cut expensive jobs at home and contract out software 
> development 
> and support, call-center operations and other functions to low-cost 
> suppliers in India and elsewhere. By 2008 the Indian 
> government expects 
> the industry to account for about 8 percent of all economic 
> output, up 
> from 2.87 percent now.
> 
> More than half the world's top 500 companies, including General 
> Electric and American Express , outsource work to India.
> 
> To supply the demand, Indian companies like the 
> Bangalore-based Infosys 
> Technologies and Wipro , and Tata Consultancy Services, or T.C.S., of 
> Bombay, part of the Tata conglomerate, have been hiring by the 
> hundreds, bucking the generally sluggish global trend. Revenue from 
> software and services exports from India were $6.9 billion in 
> the last 
> three quarters of 2002, up 28 percent from the period in 2001, 
> according to data released Tuesday by the National Association of 
> Software and Services Companies. The association, known as Nasscom, 
> organized this week's conference.
> 
> The legislation being considered in several states has software and 
> services executives worried that American opposition to 
> outsourcing in 
> India is growing. They worry that regardless of whether such laws are 
> enacted, the sentiment will spread. It may, they fear, slow 
> companies' 
> decisions to outsource - and perhaps even encourage them to send work 
> to other countries.
> 
> India's exporters are divided over whether such legislation should be 
> challenged at the World Trade Organization. "Legislation banning 
> contracts from going abroad is a nontariff barrier, and we are 
> exploring the possibility of countering this at the W.T.O.," 
> Nasscom's 
> president, Kiran Karnik, said.
> 
> But some leading companies with large American corporations 
> among their 
> customers said that the job loss issue was emotional and was best 
> underplayed.
> 
> Even within Nasscom, a division was evident this morning at a session 
> on global technology trends. When one panelist, E. Jeffrey Berg, 
> executive director of Citigroup Program Management, brought up the 
> proposed New Jersey legislation, Som Mittal, vice chairman of Nasscom 
> and chief executive of Digital GlobalSoft, an Indian subsidiary of 
> Hewlett-Packard , cut in, saying that even a discussion would 
> sensationalize the issue.
> 
> Nasscom has recently engaged the public relations firm Hill & 
> Knowlton 
> to work with businesses and politicians in the United States 
> to counter 
> the opposition toward outsourcing to India and to increase the global 
> brand equity of the Indian software industry.
> 
> While in the past there has been opposition in the United States to 
> moving manufacturing jobs overseas, those moves primarily affected 
> blue-collar workers. Now, the jobs of white-collar workers are on the 
> line. "This is the vocal, articulate middle class who form an 
> important 
> constituency of every political party," Mr. Karnik said.
> 
> Nasscom said it was campaigning to show how Indian software and 
> services exporters were helping the American economy to be more 
> effective. In a letter to the governor of New Jersey, Nasscom 
> said its 
> preliminary data indicated that outsourcing to India gave American 
> banks a 10 percent to 20 percent cost advantage over their European 
> peers and resulted in an $8 billion savings for the banking 
> industry in 
> the last four years.
> 
> Nasscom is also talking to nearly 40 state senators in New 
> Jersey in a 
> campaign against the legislation, saying that state governments would 
> have to burden their citizens with more taxes if they insisted that 
> work be done in high-cost locations.
> 
> Despite the controversy, outsourcing deals are still being struck by 
> Indian companies. Among them, the World Bank is scheduled to announce 
> next week a $10 million to $20 million technology services deal 
> outsourced to an Indian software company. "Backlash is a natural 
> reaction even at the World Bank, but in this era of globalization, 
> sustaining business and securing jobs is more likely to happen if 
> projects are executed in the most efficient destinations," 
> said Mohamed 
> V. Muhsin, chief information officer of the World Bank.
> 
> Gartner Inc. , the research firm based in Stamford, Conn., 
> has prepared 
> a note advising its Indian clients to promote the value of their 
> services not just to customers but to the public.
> 
> In the note, "How to handle backlash against offshore services," two 
> Gartner analysts, Rolf Jester and Partha Iyengar, warn, "To 
> ignore the 
> problem, or to pretend it is not real, is to allow negative 
> perceptions 
> to fester, generating a climate of opinion in which selling becomes 
> more difficult." 
> 
> 
> [This message contained attachments]
> 
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