Ohio ban won't impact Indian IT exporters' future

Bangalore: The ban on offshoring of government IT projects by U.S. state Ohio will not impact Indian IT exporters in the short run. The experts feel that this is because of the marginal share of government projects in the current outsourcing pie and the faster adoption of such services by the private sector, Ranjit Shinde from the Economic Times.

According to industry estimates, government projects currently constitute less than 5 percent of total IT outsourcing work. Hence, at least in the immediate future, any governmental regulation or ban will not have significant impact on the outsourcing industry. The long-term scenario, however, largely depends on the availability of skilled labour locally and also on how well outsourcing vendors strike a balance between local hiring and offshoring.

Industry trackers point out that the share of government projects is bound to grow in future due to various e-governance initiatives across the world. Therefore, regulatory affairs may tend to restrict participation of offshoring vendors in this growing pie.

The protective stance by governments may not be easy to follow over the long term. Deloitte India's Senior Director Sanjoy Sen points out two important factors. "First, there is a huge skill shortage in the North American region. And two, the average population age is on the rise, which means the shortage of human resources is here to stay."

Amid the din over governmental ban, one interesting report by Gartner went almost unnoticed. The global research agency said on Tuesday that outsourcing is rising in Europe. According to Gartner, 53 percent companies in Europe intend to increase outsourcing in 2010. The survey further highlighted that the number of companies that spent more than 50 percent of their IT budget on outsourcing services also increased.