India Has Saved US BFSI Sector Over $8 Billion, Says Nasscom

New Delhi: | Updated: Jan 21 2003, 05:30am hrs
The US banking, financial services and insurance (BFSI) sector has witnessed a cost reduction of over $8 billion from outsourcing its IT requirements to India over the past four years, according to National Association of Software and Services Companies (Nasscom).

Outsourcing of BFSI-related IT activities to India has become critical not only for the US but also for India. BFSI accounts for nearly 40 per cent of the total IT work outsourced to India. In the last fiscal ending March 2002, upto $3 billion of IT work (including software and IT-enabled services (ITES)) in BFSI sector was outsourced to India. In the last four years, US has outsourced almost $5.5 billion of IT work in BFSI to India. This is just a fraction of their total work and amounts to only 3 to 4 per cent of their total IT spending in these years, Nasscom vice president Sunil Mehta told eFE.

In an attempt to secure Indias position as a destination for handling outsourced IT work, Nasscom is in the process of spearheading an education and awareness campaign in the US, UK and also for the World Trade Organisation (WTO).

We are identifying key people in the US, UK and WTO to engage in one-on-one discussions on the economic impact of outsourcing in these difficult times and slowing economy, Mr Mehta said.

The campaign is the result of a bill that was passed recently in New Jersey, which bars contracting government jobs to outside agencies. India has no significant operations in New Jersey but this bill will certainly impact the sentiment of the Indian IT industry. New Jersey is an issue of inadequate information, he said.

Nasscom is also engaging the Indian embassy and the high commission for its awareness campaign. Though we have sent a formal written communication to the New Jersey government, no written communication has been sent to the WTO, Mr Mehta said. A formal, written communication can be sent to the WTO only with the involvement of the commerce ministry and Nasscom believes that there is still some time before taking this step.

The total IT and ITES work outsourced to India in the area of BFSI from the US is likely to go up by 30 per cent to $4 billion in this fiscal ending March 2003, he said. u