Short-term Hurdles To Outsourcing

New Delhi: | Updated: Jan 29 2004, 05:30am hrs
Global information technology (IT) industry analysts expect more anti-outsourcing measures by the US government in an election year. However, they prefer to call them short-term hurdles and do not anticipate any adverse impact on outsourcing/offshoring trends in coming years.

According to US-based research firm Forrester Research Inc group director (Research) John McCarthy, the US government present and the new one after the elections cannot do much to reverse offshoring trends.

At worst, they will only create short-term barriers, he said in an e-mail reply to eFE.

Gartners BPO analyst Sujay Chohan said that more such things (anti-outsourcing bills) may be expected as American politics was no different and would be tempted to adopt such measures.

But, it will no way change the offshore trends. Outsourcing offshore is a win-win to both the countries. While a US company outsources worth $1 work offshore, it gives away only 50 cents and saves the remaining 50 cents, he said.

We are advising companies both in the US and India to be more sensitive to backlash as it is a human issue and understand the sentiments. It is a temporary phase and will pass as the economy keeps rebounding. In any case, backlash will not affect outsourcing trend from corporate America, as it involves issues such as profitability and shareholders value, Mr Chohan said.

Echoing similar sentiments, UK-based research firm Ovum analyst Phil Codling also said that the governments (in the US or the UK) can make any adverse impact on outsourcing only in short term.

In short, yes. But we believe it is unlikely that the UK government will intervene to dramatically curb offshore outsourcing in the foreseeable future, he said.

Frost & Sullivan country head Aditya Sapru said, The recent law is unlikely to have tremendous impact on the Indian IT industry from the revenue perspective. However, from trend perspective, this is detrimental to the Indian IT companies handling outsourced work.

In the short term, consulting firm McKinsey sees hesitation looming large over companies considering the option of outsourcing to countries like India. Companies cannot avoid offshoring work to countries where it gives them a competitive advantage. But surely this is dampening the sentiment of the Indian IT industry on the whole, McKinsey engagement manager Sunish Sharma said.