Political Turmoil Wont Slow Down Offshoring: Experts

Orlando | Updated: May 20 2004, 05:30am hrs
The political turmoil rolling India this week is unlikely to discourage the offshoring of US computer jobs to India, according to many industry experts attending a high-tech conference here.

Foreign direct investment is extremely critical for the growth of the (Indian) economy, said Ramkumar Ramamoorthy, an Indian executive with Cognizant Technology Solutions. The software company is based in Teaneck, NJ, but performs about 70 per cent of its work in India.

He said that the information technology work being sent to India is creating so much wealth there that support for the IT industry has been nearly identical among the leading political parties. Indias stock market suffered record declines after the Hindu nationalist party that has led the government since 1996 was unexpectedly defeated in last weeks parliamentary elections by the liberal Congress Party and its left-wing allies.

Some partners in the coalition, including two Communist parties, oppose ongoing economic reforms such as the privatisation of state-run industries.

On Tuesday, financial markets rebounded after Congress Party leader Sonia Gandhi, a native of Italy, said she would not seek to become prime minister. That raised expectations that a party official more sympathetic to business concerns would take the post.

No matter how the political confusion ends, the countrys new prime minister likely will see the economic advantages of having wealthy US companies send good jobs to India, experts here said. From an offshoring perspective, India doesnt have anything to lose, said Shreyas Sadalgi, who left India five years ago and now is the principal software engineer at Tacit Networks Inc, based in South Plainfield, NJ.

The shift of US computing work to India is only going to make more jobs, so they arent going to do anything to stop that, Sadalgi said. In recent years, advances in telecommunications and high-speed Internet connections have allowed US employers to send sophisticated service work to low-wage countries, particularly India, which has a deep pool of well-educated, English-speaking workers.

Though the practice has infuriated many US workers, the influx of service jobs has enriched many people in India. Tech executives and workers from the US and India are attending the GigaWorld IT Forum conference here, sponsored by Forrester Research Inc. Forrester vice-president Stephanie Moore said that so far, US companies with operations in India are not making any plans to back away. In the short term, we really dont think there will be much of a negative impact on US companies using Indian labour, she said.

Thats because they believe it would be very difficult for the new government to roll back the changes that have encouraged offshoring, Moore said. Still, Moore said that over time, the outlook may change if the country becomes politically unstable. We really have no way of understanding what the impact of that will be over a long period, she said.