Click to print

Nasscom positive about India's outsourcing future despite Obama's win By Staff Reporter Posted 12 November 2008 @ 07:44 am GMT

The Indian IT-BPO industry is celebrating Barrack Obama's victory at the 44th US presidential election brushing aside concerns that with Obama at the helm of affairs, outsourcing might be curbed. According to Ganesh Natarajan, chairman of National Association of Software and Service Companies or Nasscom, the consortium that serves as the apex body of the Indian IT software and BPO industry, the present gloom in the IT-BPO industry is due to economic slowdown and has nothing to do with concerns that Obama might cut down on outsourcing. During his election rally, Obama gave hints of a protectionist regime if he is voted to power and promised tax breaks to "companies that hire in the United States and end tax breaks for companies that ship US jobs overseas," triggering concerns in India that fall in outsourcing orders could lead to reduced profits and massive job cuts. However, Natarajan said Obama's win the presidential election would not mean death of outsourcing business for India. His triumph, Natarajan said, would in fact spur the growth in outsourcing business as a strong US economy would result in huge opportunities for India. "Barrack Obama's plans to cut down on outsourcing does not pose a threat to the Indian IT-BPO industry. Our expertise in several areas of outsourcing will always attract new projects from the US," Natarajan said, adding that US companies will be under too much pressure to cut costs, and offshore outsourcing will be one way to do it. "We should not worry about any ban on outsourcing. It is just not going to happen. If at all, he might give incentives to job creation in America which we support and I don't think that is going to add any adverse impact on Indian outsourcing. After all, Obama administration at present have far more important issues to tackle with, like that of the current financial crisis. America will charter a new course for itself in history which will give opportunities for all of us in India," he said. "As the winds of change sweep across the American economy there will be multiple opportunities for Indian IT to engage in the rebuilding of the economy. Indian IT and business services firms have already entrenched their services in the heart of American value chains and can continue to provide truly transformational solutions to American corporations and the Government itself," he added. According to Natarajan, Obama is keen on putting the US economy back on track by creating more jobs but that does not necessarily mean stopping the trend of outsourcing because the main thrust is to revive the economy. "Most of us are working for Fortune 500 companies and are very integral to the value chain. So its not like shutting down a factory somewhere. So he (Obama) will do nothing that will disturb the success of these companies. At the same time, all of us have to realize that job creation must happen in United States and there will be different measures to take that up. I do not think anybody sensible like Obama will come in the way of current outsourcing," Natarajan said. Nonetheless, a high-profile Nasscom delegation will be meeting top officials of Obama administration in March next year to ensure that no nasty surprises greet the Indian IT-BPO industry on the outsourcing issue, he added. N.R. Narayana Murthy, chairman of India's IT bellwether Infosys Technologies, shares the same view. "We believe president-elect Obama to be a pragmatic leader who understands that American industry needs to be competitive not just in America but in third countries as well," Murthy said. Agrees Samir Chopra, president of Business Process Industry Association of India (BPIAI). "My belief is that the election of Senator Obama does not in any way pose a threat for the Indian IT/ITES industry. Indian industry today is deeply entrenched in business critical work for global customers and in his efforts to bring the economy back in shape he is unlikely to take actions which will impact the global competitiveness of US companies," Chopra said. "I think that this (Obama's victory) will lead to a new era of greater cooperation between India and US. In the current context it is even more important for the two countries to find ways to partner together to spur innovation, foster economic growth, develop an educated work force and skilled workforce, and create jobs for the global market place," he said. "As long as the work we do is high-skilled and provide qualified talent, there is no way we can be replaced overnight. From where will the US bring so many engineers," said M. Narasimha Rao, president of Hyderabad Software Exporters Association. Agrees Kaustubh Dhavse, deputy director, ICT practice at Frost & Sullivan. "Outsourcing has benefited the American economy more than it has taken away, resulting in strong margins for the US companies which have been passed on to their shareholders who are predominantly American. The story will not be any different now and that's something Obama cannot overlook," Dhavse said. "I do not believe that Obama's presidency will spell doom for the Indian IT industry. Offshoring to India enhances the cost competitiveness of US industries and is a net creator of jobs. Obama is a new generation leader. He has an excellent grasp of economic issues and is unlikely to take measures that will hurt the US economy," said Roopen Roy, managing director, Deloitte & Touche Consulting India. "US companies outsource to India not for tax incentives but to remain competitive. My bet is that under Obama, the US and India will actually scale new heights in economic cooperation," Roy said. Meanwhile, attempting to infuse confidence among Indian techies, Nasscom said the financial crisis that has hit global markets and the economic downturn in the US are "temporary" and the IT-BPO sector in India would remain untouched by the meltdown. However, the IT-BPO lobby group has cut its hiring forecast for the current fiscal year, saying IT services companies and BPOs are expected to hire about 200,000 people by next March, instead of the 276,000 that it originally projected. The revised figure represents a significant decrease from the 250,000 new hires recorded for the previous fiscal year. To survive the global economic crisis which is likely to last for another 12-15 months, Nasscom noted IT services companies are also boosting their staff utilization rates and letting go of those who fail to live up to expectations. With the Indian software business growing by 21 to 24 percent every year, Natarajan said that by 2020, India can fulfill the need of technical talent of the whole world. "As far as IT or BPOs are concerned there is nothing to worry. By that time the whole world would need 43 billion technocrats while India will have 47 billion surplus technocrats," he said. However, Natarajan added that a huge investment was required to groom the available talent pool and urged IT firms to focus on non-US markets like Latin America, Japan, China, Europe and Africa to diversify their client base. While the US market accounts for over 60 percent of India's software exports, the UK has grown to become India's second biggest market.

Read the full aticle of: http://in.ibtimes.com/articles/20081112/nasscom-positive-about-india-outsourcing-future-despite-obama-win.htm   This article is copyrighted by Ibtimes.com.