More US States Plan Bills To Curb Outsourcing To India

New Delhi | Updated: Feb 2 2004, 05:30am hrs
The anti-outsourcing story hasnt ended with the US law that recently put strictures on outsourcing of work by two US federal government departments. In election mode for the US presidential race, there are more than half-a-dozen states in the US that are in various stages of introducing bills that could further curb outsourcing to countries like India. Also, there are numerous other states that might introduce similar bills, industry experts said.

According to various sources, several leading Indian software services companies are handling IT services work at various government levels in the US including federal, state, county and city. Consulting major Gartner and National Association of Software and Service Companies (Nasscom) said, these states include California, New York, Maryland, New Jersey, Wisconsin and Washington (three bills).

The sensitivity is surely increasing across the US on outsourcing and there is a possibility that other states might also introduce some kind of protectionist measures before the elections. India should be prepared for more, Gartner vice-president research director Partha Iyengar told eFE.

Private US companies have suddenly become cautious. They are no longer wanting to talk about their partners and operations in India, a McKinsey official said.

Kiran Karnik
According to a research and consultancy firm, two potential clients have postponed their plans to enter India by setting up back-end operations. Supporting this sentiment, McKinsey engagement manager Sunish Sharma said, Companies cannot avoid offshoring as this adds to their being competitive. But these kind of bills or laws can delay the offshoring decisions.

Nasscom too does not rule out the possibility of more such laws from being passed in the US. It would not surprise me if there are more bills or laws against outsourcing introduced in other states in the US. We could expect more bills and laws before the elections in the US in September this year, Nasscom president Kiran Karnik said.

He added, The impact of these bills, even if they become laws, will be minimal as the Indian software, services and BPO industry handles a very small part of the US government work.

According to Mr Iyengar, states like California, New York and Indiana are potential states that might introduce bills against outsourcing.