IT Backlash Could Backfire On US

New Delhi | Updated: Apr 5 2004, 05:30am hrs
The protectionist measures adopted by the US if continued could spur a backlash this time against the US IT industry. According to a report by the American Electronics Association (AeA), protectionist legislation (read outsourcing backlash) may result in retaliation, jeopardising $171 billion in high-tech services sold overseas by the US.

No sector is more threatened or more in jeopardy from retaliation than high-tech should the US pass protectionist laws, the report points out.

Some 60 per cent of the revenues of American IT companies come from outside the US.

The latest conservative estimates from the department of commerce show that 5,000 people are employed for each $1 billion of exports. These jobs are at risk, according to AeA report.

At least 20 states are considering absolute or partial prohibition of offshore outsourcing that will increase the cost for state programmes. The US also exports some $17 billion in high-tech services and sells nearly $100 billion in high-tech services through subsidiaries overseas.

According to the latest information from the National Association of Software and Service Companies (Nass-com), there are around 60 bills in various phases of introduction in the US. Though perturbed, Nasscom still maintains that the damage will be under control for the Indian software industry.

There are sure to be more bills in the US against outsourcing than might be introduced in the coming months. But all this is likely to last only till the elections in the US, Nasscom president Kiran Karnik said.

AeA maintains that the job loss over the last three years is less from offshore outsourcing than from a weak international and domestic economy and from productivity improvements. Our analysis indicates that the number of people being hurt by offshore outsourcing is exaggerated, it says.

There are some indications that the lower-end technology services jobs are being lost to offshoring, while most higher-end technology jobs are remaining in the US, the study undertaken by AeA said.

This study undertaken by AeA is called Offshore outsourcing in an increasingly competitive and rapidly changing world: A high-tech perspective.

AeA is a high-tech trade association in the United States comprising 3,000 member companies with 1.8 million employees.