Anger as Telstra outsources IT project to India

Thursday, 15 January 2004, 20:30 IST
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SYDNEY: As Australian telecom giant Telstra announced a major outsourcing deal to India, it received immediate flak from sections that see Australian jobs coming under threat. The four-year contract would be worth 200 million Australian dollars and would save 75 million dollars in costs for the Australian company. The contract has reportedly been finalised in India this week by Telstra technology, innovation and products chief Ted Pretty and chief information officer Jeff Smith. Union and media critics have immediately slammed the Telstra announcement, which can affect up to 450 software jobs in Australia. Interestingly, Telstra has signed this deal with American infotech giant IBM which has software development facilities in India. Aware about the negative fallout of an outsourcing deal with Indian software development centres, the state-owned telecom company has described the contract as mere an extension of its existing partnership with the American company. Communications Union has become the first to launch a scathing attack on Telstra for "exporting" jobs to Indian centres. "The employment prospects of our members are always under threat when contracting out is mentioned." Under a similar deal last year, 180 jobs were outsourced to India," a union spokesman John Ellery has said. "In the IT area certainly they've been looking to avoid using Telstra personnel and have chosen to use a lot of contractors and it's a further example of Telstra sending jobs offshore," Ellery said in a statement. Telstra was at the centre of unwarranted attention a few months ago as some unions had staged a noisy demonstration in front of its Melbourne head-office for signing an outsourcing deal with Indian multinational Infosys. The five-year 75-million Australian dollars deal had also embarrassed IBM, which has been serving most of the infotech needs of Telstra for very long. "While the latest outsourcing deal is obviously good for the Indian IT industry, I must admit they should not lower their rates so much as to look desperate," says Sanjay Dulloo, a Sydney-based IT firm owner, told IANS. "It is no rocket science to gauge the impact of such outsourcing on the local IT employment scene. These deals also trigger a backlash against Indo-Australian IT professionals every time they are announced," Sanjay adds. The latest Telstra outsourcing move is being seen as part of a global trend by mega-sized multinationals to outsource IT software development to 'low-wage' countries like India. The Telstra-IBM contract is reported to be the first time IBM Australia delegated any software development work to India. Telstra has taken the huge risk of inviting union and public wrath (for engaging Indian facilities) as it is battling enormous challenges to cut costs to match its ever-burgeoning rivals. But the deal has been welcomed by the Telstra shareholders with its stock price crossing A$5 mark after lurking low for a very long time.
Source: IANS