'Indian firms losing cost advantage'

Indian companies are slowly losing their edge on the cost-effectiveness front as more US companies are looking at different destinations to outsource jobs, according to Harris Miller, president of Information Technology Association of America (ITAA) and the World Information Technology and Services Alliance (WITSA).

Miller, who was in the city to deliver the keynote address at the National Association of Software and Service Companies' (Nasscom) CEO Forum, said: "The cost advantage that Indian companies had is slowly going away as the cost of human resources is going up by around 10-15 per cent every year."

According to him, the US companies are now looking at East European and Southeast Asian countries, China and South Africa to outsource jobs.

"The US companies, who have a presence in India, are also looking at opening offices in China. Around 25 per cent of the 375 members ITAA members have already opened offices in China and more are likely to follow," he said.

"According to the studies, the US economy would be better off by global sourcing. The studies showed that by 2008, consumer prices would decrease by around 2.1 per cent, the prime interest rates would drop by 0.5 per cent and the GDP and the labour productivity would go up by around one per cent," Miller said.

Miller said that the companies would also have to cope up with the changing political situation and give top priority to privacy of information.

"The perception among politicians in the US is that outsourcing of jobs creates unemployment back home, but various studies have proven this wrong. In 2003, 90,264 more jobs were created in the US and this is expected to go up to around 3.17 lakh jobs by 2008," he said.

On the of security of information, he said that if people feel outsourcing of information on financial records, health and human records is not safe, then they will rise and say that this cannot continue.

"The companies need to take note of this seriously and must have the capacity to address these issues. Indian companies will have to look into three aspects to mitigate this risk -- one by having the best security platform being installed, the next by having proper process in place and finally by having the right people working for them," Miller said.

According to him, the people in the US at the moment think that enough financial information has been outsourced and want it to be stopped for a while.

"On the other hand, if the US government says that it will not outsource any government information, then other countries will retaliate as US companies do a lot of government work of other countries," he said.