Indian Decade

US and India: Outsourcing Blues

The US government thinks its position on outsourcing to India is fine. It isn’t.

There’s clearly some disconnect on outsourcing between the US government and Indian companies. Unfortunately, the United States is underestimating the anger and dismay that’s being generated in India by some of its recent actions.

US President Barack Obama’s chief technology officer, Aneesh Chopra, said during a recent visit to India that the US ‘will surely listen if there are any concerns. But my sense is that companies in both countries are happy (with the current environment)’.

But Indian IT big hitters like Infosys, TCS and Wipro would beg to differ. Their top US customers are postponing new contracts given the blistering political rhetoric against IT outsourcing — especially to India — as the US heads into its mid-term congressional elections.

Infosys’ chief executive S. Gopalakrishnan told a business newspaper that ‘What we see from customers is that they are committing short term; they also reserve the right to cancel. So clearly, everybody is playing the short-term game at this point.’

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This point has been underscored by John C.McCarthy, vice-president and principal analyst at the US-based Forrester Research. ‘Customers,’ he is reported to have said, ‘are not pulling any trigger yet on big contracts and, unfortunately, the November election is making them even more cautious.’

With a clouded future for India’s $50 billion outsourcing industry, Obama’s November state visit to the country could be marred by anger that will be inflamed by US protectionist measures such as the steeply hiked H1-B visa fee, a move that would hurt US onsite operations of Infosys and other firms.

How will his administration respond?