Indian IT's concern: Will rest of U.S. follow Ohio's footsteps?

Mumbai: In the wake of Ohio banning outsourcing of government IT and back-office projects to offshore locations such as India, the Indian Information Technology (IT) industry has criticized and expressed its concern over the matter. Many Indian IT majors have expressed the feeling that it could be part of a worrying trend and similar moves are feared from other American states as well, reports the Times of India.

This decision has come at a time when Indian IT industry is trying to cope with the recent hike in visa costs and rising protests against outsourcing in other US states. Ohio's move adds to the perception that outsourcing is risky and that it involves serious loss of jobs.

Kris Gopalakrishnan, CEO & MD Infosys said, "We are concerned with the recent news from U.S. about banning offshore outsourcing by Ohio State government departments. Infosys' initiative in the Public Services sector is focused on creating a domestic Delivery Center in the U.S. hence this should not be affected."

"I think this is worrisome, because first of all it is a non issue that is being hyped up. The fact of the matter is that the Indian IT industry does very little work with state governments in the U.S. If you look at Mindtree for example, 62 percent of the business comes from the U.S. and not one percent of that is related to government work. But at the same time, I think it is this posturing that causes concern. The U.S. economy is in a difficult state and its state governments are making Indian outsourcing the whipping boy without fixing their own fundamental problems," said Subroto Baggchi Chairman of Mindtree.

Mohandas Pai, Director of Infosys said the move was a manifestation of the 'great stress' being faced by the U.S. with regard to employment and with elections around the corner in November, anti-outsourcing had become an important platform in the U.S. to reach out to the dissatisfied citizens.

The order was passed by Ohio governor Ted Strickland who justified the move saying that outsourcing impacts economic development. "There are pervasive service delivery problems with offshore providers, including dissatisfaction with the quality of their services and with the fact that services are being provided offshore," said the governor.

Offshoring work to India is a $50-billion industry and it employs about three million people across India.