Obama can't overlook Indian outsourcing industry 6 Nov, 2008, 1759 hrs IST,Abhijit Deb, ECONOMICTIMES.COM
Can US president elect, Barack Hussein Obama, afford to lose billion of dollars
they get from Indian outsourcing industry in the current fin
Joys and woes of US Elections
ancial meltdown by cracking a whip on Indian outsourcing industry? Well, going
by the initial trends of the IT sector after the election results in US, the
outsourcing industry in India seems assured that the US economy can't overlook
them.
Over 80 per cent of the BPOs and call-centres in India are regulated by the US
companies--the main pillar of Indian outsourcing industry.
According to NASSCOM, the outsourcing industry is growing at compounded annual
growth rate of around 37 per cent over the last few years. BPO exports have
been the fastest-growing segment of the Indian IT-BPO sector. They have grown
from $3.1 billion in fiscal 2004 to $11 billion in 2008 and currently account
for 37 per cent of the global business process offshoring pie. They sustain an
employee pool of more than 700,000.
Indian BPO vendors have relied largely on English-speaking geographies as their
markets. North America and the UK together account for about 87 per cent of
their export revenues. North America, primarily the US, accounts for roughly
two-thirds of the market alone.
There were lot of panic which reflected in share prices of Indian IT companies
after Obama during his presidential campaign had made some controversial remark
on outsourcing of American jobs to India.
"As the subsequent US governments had worked in past I don't see any major
shift in its business plan during Obama's tenure. All the US government has
always worked in the favour of business community and besides that, Indian
resources has always helped US economy," Tejas Doshi, head, Sushil Financial
Consultants, said.
"If Obama wants also to reduce the outsourcing from US he wont be able to do it
for the reason that if you compare the US resources and Indian resources the
latter is much more productive and cost effective so as long as Indian
resources remain efficient they will be in business," he added.
IT analyst from Khandwal Securities said, "The importance of Indian outsourcing
industry to American economy is enormous. If Obama wants also to put a brake on
outsourcing he wont be able to do it as he knows how much revenue the US gets
from Indian IT, ITeS and BPO sectors".
Even US-based companies such IBM (40%) Accenture (25%) have sizeable workforce
in India.
Many analysts are also of the opinion that even if Obama wants to force an
anti-outsorucing law all these global companies which are based in US will
stand in his way as their back office operation are much more dependent on
outside markets like India.
A CEO of a US-based leading BPO centre who doesn't wished to be named said,
"Obama had made some promise to people on outsourcing. But the strong
industrial lobby will surely not want them to fulfil. It will be tough for
Obama to ignore them, only if he's not desperate."
"Moreover, the availability of skilled labourers and high cost is an issue in
US and in the present economic downturn Obama cant afford to go ahead with anti
outsourcing stance as his own economy will suffer," he added.
However, analysts feel that once Obama takes the presidential office formally
in January there might be some announcement related to outsourcing as he has
promised during his election campaign which could affect IT industry in the
short term and there might be some knee-jerk reaction in the stock market.
"Some cause happiness wherever they go; others whenever they go."
- Oscar Wilde
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