Thursday, November 6

IT cos, BPOs loath to say Obama zindabad

THE US president-elect Barack Obama’s conservative stance on outsourcing and the current global financial mess will have a negative impact on offshoring in the short term. Concerns over US job losses will ensure that new contracts are difficult to come by, even as repeat business particularly from BFSI space, will be under pressure. But in the mid to long term, that is from Q2, 2009-10, things could look better for the $50-billion IT and business process outsourcing (BPO) sector as companies see significant growth in new business. Experts point out that IT services and BPO will eventually grow as offshoring is part of the solution — helping global companies to cut costs — and not a problem. And with Mr Obama’s promise to incentivise businesses that create jobs in the US, IT and BPO companies might expand onsite presence, via acquisition or organic growth along with growing global delivery. Infosys Technologies chairman NR Narayana Murthy said: “We believe president-elect Obama to be a pragmatic leader who understands that American industry needs to be competitive not just in America but in third countries as well.” He added: “The US has voted for compassionate capitalism over laissez faire capitalism. Besides, this election has shown that meritocracy matters most. This election has also proved that the internet is a powerful medium for raising funds.” Quatrro BPO CMD Raman Roy said: “In the mid to long term we see more offshoring. They (US) don’t have that many engineers. How will they manage without offshoring.” It may not translate to quick offshoring arrangements as businesses take time to emerge out of the financial crisis. But the industry is optimistic about the long-term prospects. “There are no new strategic deals in BFSI. Eventually there will be pressure on companies to manage cost structures better and hence they will increase offshoring,” Firstsource Solutions MD and CEO Ananda Mukherji said. The company has over 19,000 staff — about 3,000 in the US. “Obama’s statements on outsourcing comes in the context of the rising unemployment rate in the US. The unemployment is largely in the manufacturing sector. His statements on H1-B visas are in tune with our stance. He has supported a temporary increase in the visas until US workers are skilled enough to meet the industry demand,” said Nasscom vice-president Ameet Nivsarkar. In a similar vein, Gartner India vice-president Partha Iyengar said: “Obama’s comments about bringing jobs back to the US were primarily in the context of manufacturing jobs. Once the election rhetoric dies down, I do not expect that this — trying to discourage offshore outsourcing — will be a strong issue.” While most representatives in the IT sector feel a change in leadership at Washington will be good for the US economy and would hence benefit the sector, they also apprehend that Mr Obama may resort to some protective measures to prevent job losses in the US.

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