Nasscom optimistic on outsourcing row

Nasscom does not see major loss of revenue for Indian business process outsourcing (BPO) companies. Politicians in the US have been campaigning against job losses due to relocation to countries like India and are threatening to implement stringent laws as the US heads for elections. The IT body also hopes to solve the touchy issue of BPO circular with the government shortly in favour of the industry.

"Despite the fact that US was faced with an election six months from now, we do not see major loss of revenue. The loss would primarily be for government BPOs which account for only a small two per cent of the total jobs outsourced to India," explained Kiran Karnik, president of Nasscom, at a press meet in Kolkata today.

He said although there were apprehension among BPO companies that the issue of jobs moving to India and other Asian countries would be sensationalised by politicians, and some legislation was expected, it would only have to do with jobs outsourced by government bodies. Outsourcing from financial and other segments were not really under threat.

"We are however not very happy with the state of affairs, but data suggests that job losses with respect to offshoring services has in fact helped create more jobs in the financial sector and has also helped US mitigate the recessionary trend to a large extent," Karnik explained.

On the Indian government's BPO circular, Karnik said, "It sends a wrong message. Nasscom expected some support from the government, instead the circular has come as a googly to us. Foreign investors now have the feeling that if the government can attempt to tax them abroad, there could be announcements which might be even worse."

Nasscom was talking to the government, which Karnik described as being "receptive and reasonable". Industry hoped the problem would be solved soon in their favour.

Although UK was not facing elections, outsourcing has come under pressure in Britain too. Data suggested unemployment in the UK has been the lowest in 2003 when BPO peaked. Employment increased in the financial sector, which outsourced jobs to India.