Anti-BPO tide likely to hit Indo-US ties

US Congressmen and Senators, both Republican and Democrat, have warned that the management of outsourcing and consequent job-loss in the US was going to become a challenge to Indo-US relations and that unless a way was found to educate business interests in the US of the business opportunities in India, the battle to prevent the erection of protectionist barriers hastened by job losses in America, might be lost.

Acknowledging that outsourcing was becoming a big election issue in the US, lawmakers said outsourcing was making it cheaper to do business but loss of jobs was turning this into a political issue.

The solution was for countries like India, that had benefited from outsourcing, to create jobs in the US through investments "" like the ones made by the Tatas, for instance.

Speaking at a CII-sponsored meeting with a delegation of US Congress members, Joseph Crowley (Democrat), co-chair of the Congressional Caucus on India and Indian Americans, said the issue of outsourcing and its fallout had to be addressed head on.

He said in an election year when unemployment was the center piece in political campaigns, job losses from outsourcing would become a political issue.

He said this trend had the dual purpose of diverting attention from the objective economic reality of the US and creating a political platform for many candidates.

But, Crowley said the fact that the US had a massive adverse balance of trade with India did not help matters.

There was need for equity in this sphere. Crowley said India and the US had a strategic partnership and to sustain this, it was important to ensure the backlash against outsourcing was contained.

Other members of the delegation skirted round the issue, but thought it important to mention it nevertheless.

Senator John Cornyn (Republican) said globalisation and free trade resulted in labour dislocation but were aimed nevertheless at gaining greater efficiency.

"In an election year, there is bound to be some rhetoric that defeats free trade. But it is important to look, not at the short-term gains but at the long-term benefits," he said.

In a chat with Business Standard, several members of the delegation sounded a warning that unless the issue of outsourcing was explained to the US public, and backed up by investments by Indians and Indian companies, it would not be possible to stem the tide of opinion against it.

Pending in the US Congress, is a Bill sponsored by two Republican Senators, Craig Thomas (R-Wyo.) and George Voinovich (R-Ohio) prohibiting contractors from performing work outside the US.

Senator Christopher Dodd (D-Conn) and Rep Nancy Johnson (R-Conn) have introduced Bills in their respective chambers that would restrict use of the L-1 visa.

The L-1 visa is an intra-company transfer visa that allows US firms to import employees from foreign subsidiaries, affiliates or parent companies.

There is no limit to the number unlike the H1B visa, currently pegged at 195,000. There is a huge agitation on to get the administration to scrap this category of visa.