Indian IT firms brace for global backlash as competition grows

Monday, 31 March 2003, 08:00 Hrs
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India's high-profile software industry has long been seen as the electronic housekeeper to the world, taking care of a host of critical backend work for multinational giants in developed as well as developing countries.

NEW DELHI: As Indian training institutes churned out tens of thousands of computer literates a year, the vast majority had jobs waiting for them overseas with the local firms rushing to spread wings to offer services at sharply lower rates.

But as the global recession tightens its grip and job losses in many economies become a norm, India's cost-effective software army is increasingly becoming the envy of foreign lands.

The backlash against Indian firms in the tech world is gaining ground, whether in the form of opposition to U.S. and British companies outsourcing jobs to India or European nations imposing visa restrictions on Indian IT staff.

"As authorities abroad try to contain the backlash against rising unemployment, foreign workers become the first targets," said Kiran Karnik, president of the National Association of Software and Service Companies (Nasscom).

"As India's software professionals are spread out across the globe, it is a matter of concern that the top executives of the companies are now being treated with hostility," Karnik told IANS.

And if the alleged harassment meted out to the Indian techies overseas in the last six months is any indication, the domestic industry is in for tougher times ahead, say analysts.

Software companies are concerned about their businesses in countries ranging from the U.S. to Indonesia, where political parties and trade unions are becoming increasingly twitchy about "foreign" workers snatching away jobs.

In the latest incident of backlash against Indian software pros, nearly 15 software professionals working for I-Flex Solutions, one of India's leading mid-size software solutions firms, were questioned in Amsterdam last week.

The company said it was not aware of the exact extent of investigations, but that knew they were questioned over visa-related matters. The employees were later told by the Dutch authorities to leave the country within a week.

I-Flex, which is based in Mumbai and is 42 percent owned by Citigroup Inc., said the chief executive of its Netherlands subsidiary, Senthil Kumar, was also arrested in London, apparently following a complaint by the Dutch government.

I-Flex is among India's top 20 software exporters with a turnover of $100 million. In the Netherlands, the company is mainly in the business of providing software solutions for banking.

The Indian government reacted strongly to the harassment of professionals and accused the Netherlands of practicing "neo-protectionism" by putting barriers in the free flow of professionals.

The detention of I-Flex employees was the third incident involving Indian IT workers abroad since December last year.

Police in Indonesia detained the chief executive officer of another IT company, Polaris Software, last year. Arun Jain was released following the intervention of the Indian government.

Earlier this month, 270 Indian IT professionals were detained in Malaysia over alleged visa irregularities. The Malaysian government later apologised and ordered a probe into the incident.

Nasscom, India's premier IT industry lobby, says it plans to closely work with the IT industry and embassies of various countries to ensure greater understanding of visa-related issues.

Indian software firms say the impact of the harassment of professionals in foreign countries is likely to be felt on businesses sooner than later.

"The business model itself may change. IT companies cannot begin project work in, say two weeks' time at their customer's offices," said a finance officer of a Bangalore-based mid-size services company.

"Governments in developed as well as developing countries are becoming very strict and watchful in supporting their communities and local jobs," the official added.

India's cost-effective software army caters to a wide customer range, including global financial giants and telecom equipment makers. While price competitiveness has been its strong point, the slowdown that hit last year has made it a necessity.

This has helped the industry to log a 29 percent growth in software exports to $7.5 billion in the fiscal year ended March 2002 over the previous year. This compares with just $1 billion worth of software exports during 1996-97.

But the backlash is bad news for the Indian IT sector, which is still hoping to reach its $80 billion revenue target by 2008 by selling software and services abroad.

The backlash against IT pros comes as a double whammy for local tech firms who are also facing increased opposition from policymakers and powerful unions in the U.S. and Britain on outsourcing jobs to India.
Source: IANS

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