Gangs of New Jersey

Gangs of New Jersey - Part 5

Date: Wednesday, March 12, 2003 12:48 PM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

According to this article the issue of outsourcing is, "simply put, the
quality of IT services offered by India is better than what US-based
firms can get in that country."

If that isn't enough to change the minds of New Jersey legislatures,
there is a threat that passage of Sen. Shirley Turner's bill would
invite the wrath of the WTO.

>>> Them's fightin' words!

Even if the WTO ordered New Jersey to outsource the welfare
administrative jobs to India, the news coverage of how the greedy
globalists robbed the jobs of American workers would be priceless. Most
people in Jersey probably have no idea that workers in Mumbai have
access to their personal information so it would be of great help if
the WTO explained why that is mandated by the "free traders".

http://economictimes.indiatimes.com/cms.dll/xml/uncomp/articleshow?artid=39658011

The Economic Times Online

Printed from economictimes.indiatimes.com >News By Industry >Infotech
>Software

The US BPO backlash: History favours India

ADITYA CHATTERJEE

TIMES NEWS NETWORK[ SATURDAY, MARCH 08, 2003 02:11:16 PM ]
NEW DELHI: Its been a mixed week for the Indian Business Process
Outsourcing (BPO) industry. While on one hand UK telecommunications
giant British Telecom (BT) announced setting up call centre operations
in India that could see creation of 2,200 jobs, there were tense
moments owing to events at the New Jersey Senate.

The Senate was hearing a Bill introduced by Senator Shirley K Turner
which sought to stop the import of US government's BPO work from other
countries. Thankfully, the Senate put the Bill on hold giving Indian
interests in BPO work a temporary reprieve.

The provocation for moving the Bill had come in the form of
Arizona-based eFunds Corp., a contractor hired by the New Jersey
government to manage a welfare programme, relocating its
customer-service operations to Mumbai from Wisconsin. Other than New
Jersey, four other states -- Missouri, Maryland, Wisconsin, and
Connecticut -- are also considering similar legislations.

Bills, like the one introduced at the New Jersey Senate, are
specifically designed to protect local US jobs. With job losses
becoming a big issue in the West, employment of the local population
has become a highly sensitive subject -- taking strong political
overtones. Many unions are protesting outsourcing work too. Even BTs
proposed venture has seen Britain's largest Communication Workers Union
(CWU) issuing threats of nationwide demonstrations and strikes.

That pink slips and rising unemployment are forcing Western politicians
to look at protectionist measures is understandable. Even the US media
(cover stories in magazines like Business Week and others) have
recently highlighted the migration of white-collar jobs from the US to
developing countries in Asia, Africa and Eastern Europe. One actually
sympathises with US concerns. And why not?

Any government worth its salt has to cater to local sentiments.
Large-scale unemployment wreaks havoc to the social fabric of a nation.
Today, it is the US politicians who are screaming murder. Tomorrow, who
knows? May be, it will be India's turn to cry foul.

Perhaps in these difficult times, it's a good idea to focus on the
long-term benefits of outsourcing work. In today's market-driven
economy, geographical loyalties do not have any place, it is the
interests of global shareholders that are paramount.

Take the service of Indian firms to US globo-corps as example.
Outsourcing is helping Corporate USA not only to cut costs, it is also
resulting in higher profit, better growth, and therefore better returns
to investors. That more-efficiently run and richer corporates will
eventually create more jobs is also a given.

A recent internal analysis by Nasscom has shown that the American
banking and financial sector alone has been able to save around $8
billion in the last four years due to outsourcing their requirements.
Simply put, the quality of IT services offered by India is better than
what US-based firms can get in that country. Besides, the affiliates
and subsidiaries of Indian IT companies contributed around $215 million
to the US exchequer as taxes last year.

Coming back to the New Jersey Bill and others of its kind, all these
definitely make up bad news from the Indian point of view. For, not
only do such Bills raise the bogey of job losses to non-US residents in
an environment where the US economy continues to be sluggish, there's
also the fear that once the anti-off-shore lobby gains enough momentum,
it could transcend the BPO segment and affect software services as
well.

On the face of it, an anti-outsourcing Bill - if enacted - will only
prohibit US government agencies from giving BPO work to India. The
effect of this will be only marginal since public-sector work accounts
for only a small part of India's software and services exports to the
US.

India, however, has to contend with the chilling after-effects of a
blanket prohibition. US companies may just be reluctant to send work
overseas lest it complicate dealings with American government agencies.

God unwilling, if this happens, it will be disastrous for India. The
$10 billion software and services industry is hugely important for
India. The industry has grown robustly despite the broader slowdown in
technology spending, as Western companies and especially American ones,
have cut expensive jobs at home and contracted out software development
and support, call-centre operations and other functions to low-cost
suppliers in India and elsewhere.

More than half of the world's top 500 companies, including General
Electric and American Express, outsource work to India.

Thanks to these outsourcing operations, India earned a revenue of $6.9
billion in the last three quarters of 2002 from software and services
exports. Despite the worldwide downturn, the figures showed a 28 per
cent improvement from the comparable period of 2001, according to
Nasscom data.

India is heavily betting on software services for a booming economy. By
2008, the Indian government expects the industry to account for 8 per
cent of the country's GDP, up from 2.9 per cent currently. All these
plans could come unstuck, if US senators turn spoilsport.

History, thankfully, is kind to Indian interests. Three years back, the
US Supreme Court had struck down a Massachusetts state law, which
boycotted companies engaging in trade with Myanmar for alleged
violation of human rights in that country. The ruling had come after
the EU and Japan challenged the law in the WTO along with several trade
organisations.

Sidney Weiss, president, US Custom and International Trade Bar
Association, for one, believes that the proposed Bill at the New Jersey
Senate will fail the test of constitutional validity as well as the
yardsticks set by the WTO. Such legislations fundamentally violate the
provisions of US Constitution and the WTO agreement, he said.

"The US Constitution does not grant powers to the states to enact laws
that are under the realm of the federal government," Weiss recently
said, adding, "The New Jersey law is also likely to meet the same fate
of the earlier Massachusetts state law. For India's sake, let's hope
that Weiss is right in his judgement.

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