U.S. government opposes legislation against outsourcing

Friday, 13 June 2003, 19:30 IST
Printer Print Email Email
The U.S. government disapproves of legislation adopted by states like New Jersey banning outsourcing of technology jobs to India.

WASHINGTON: When Indian Commerce and Industry Minister Arun Jaitley raised the issue during his talks with U.S. Trade Representative (USTR) Robert Zoellick here Thursday, he was told that the U.S. federal government considers these measures "bad policy" and not only "opposes it but is trying to resist it". Addressing a press conference here at the end of his two-day visit to Washington, Jaitley said: "We explained the sensitivities of India's concerns that public and political opinion in India regards it completely contrary to the spirit of market access. Therefore such a proposal does create an adverse environment when market access negotiations in various sectors are on. "The USTR was very appreciative of our stance and he told me that the federal government of the U.S. considers these proposals as 'bad policy'. The federal government opposes it and is trying to resist it." Saying that the roadblocks to business process outsourcing (BPO) were an important issue at the political and public level, Jaitley added: "India feels that such restrictions are completely contrary to the spirit of market access." Of late there has been an outcry in the U.S. against thousands of technology jobs ranging from data entry to software engineering being lost to cheaper overseas competitors. For instance, in New York the largest brokerages banks and insurers are contracting major tech work to providers based mainly in India and China. The trend, also called offshoring, saves companies up to 70 percent because the cost of work in China and India is only a fraction of what it is domestically. According to a study by management consulting firm A.T. Kearney, financial services companies are planning to move more than 500,000 jobs overseas in order to reduce operating costs by $30 billion annually. A recent report by the Federation of Indian Chambers of Commerce and Industry (FICCI) said American companies had saved $16 billion due to outsourcing. According to Ernie Nounou, founding partner at the Catalytic Group, a Manhattan-based tech consulting firm, offshoring costs him between $1 and $1.5 million each year. "We can't charge as little as they're charging," Nounou said. "The irony is we in the U.S. developed the technology and now it's cheaper to do it over there and we're losing business."
Source: IANS