Ohio bans outsourcing to India, Infosys concerned

Discussion in 'Foreign Relations' started by hungo, Sep 8, 2010.

  1. hungo

    hungo Regular Member

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    Ohio bans outsourcing to India, Infosys concerned


    The American state of Ohio has imposed a ban on outsourcing of government IT projects to offshore destinations such as India. TCS, India's largest IT company, runs a project in Ohio.

    The move is likely to affect Indian companies that derive more than 50 per cent of their revenues from the US, though not necessarily from the government sector. Many Indian companies have shifted their priority to the government sector in the wake of recession and this move is likely to throw a spanner in their new strategy.

    Kris Gopalakrishnan, CEO of India's second largest IT company Infosys, said that the company was concerned by the move. "This is raising a protectionist barrier. All governments tend to be worried about unemployment. Unemployment has not gone up. We need to look at a global perspective. We are working with governments. We must increase local recruitment. There has to be a balance," he said in a statement to NDTV.

    Unemployment has hit a record 9.6 per cent in the US leading to rising concerns about the pace of recovery in the world's largest economy.

    Only last month, US President Barack Obama signed into law a new Border Security Bill proposing a steep hike in some categories of H-1B and L-1 visa fees. The Indian government had threatened to take the US to the World Trade Organization (WTO) over the new law saying it targeted Indian companies unfairly.

    Reacting to the latest development, Minister of State for Parliamentary affairs V. Narayanasamy said that, "As far as WTO talks are concerned, we can't say anything since negotiations are on. But we have our own strengths. All these things are minor irritants. The prime minister is seized of the matter."

    Ohio bans outsourcing to India, Infosys concerned - NDTV Profit
     
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  3. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    The title is misleading... it isn't directed at India. It is protectionist against everyone. You can expect all of the governments to do the same when their domestic jobs are so low.
     
  4. The Messiah

    The Messiah Bow Before Me! Elite Member

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    What happened to capitalist free market forces ? gone down the gutter...yanks are hypocrites of the highest order.

    If other country did this against usa then they'll be up in arms.
     
  5. tarunraju

    tarunraju Moderator Moderator

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    Let's see if Ohio has the stones to say "Companies based in Ohio are banned from manufacturing outside USA."

    Of course it doesn't. That's where you can see the hypocrisy in Ohio's government, and how it's selective (specifically anti-India in its policymaking). I'm sure more jobs are lost in Ohio to Chinese manufacturing than Indian service-sector outsourcing.
     
  6. Rahul92

    Rahul92 Senior Member Senior Member

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    I expected this a long time ago that IT will not be a perfect future with a economy growth of 8.8% do you think India will slave its life time in IT it is better to concentrate manufacturing sectors I strongly Believe that INDIA IS THE CENTER & WILL BE THE CENTER IN FUTURE

    :emot112:
     
    Last edited by a moderator: Sep 8, 2010
  7. Rama

    Rama Regular Member

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    india should remind us that their unemployment problems are caused by china not india
     
  8. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    China do that crap every day.
     
  9. amoy

    amoy Senior Member Senior Member

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    India should retaliate with protectionism in the same fashion. Let's check what India imports from the US
     
  10. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    India should really retaliate to Chinese protectionism. That is where they suffer the most... not Ohio. lol
     
  11. Daredevil

    Daredevil On Vacation! Administrator

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    If Ohio bans outsourcing to India then the companies which want to cut-down on expenditure by outsourcing will move out of Ohio. In the end, it will be the loss of Ohio than India.
     
  12. Rage

    Rage DFI TEAM Stars and Ambassadors

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    Protectionism will hurt us a lot more. We don't have the might to match a $14 trillion economy.

    If we impose tarriffs or prohibitions, we will simply not have the industrial ground work to manufacture some of the types of sophisticated machinery, aircraft, defense equipment, nuclear reactors or high-tech electronic equipment we currently import.

    On the other hand, almost everything the US imports from India is replaceable- software and services exports via their own largely service-based economy; apparrell, gems and jewellery from other manufacturing countries, seafood and agricultural produce from Northern European, East Asian or Latin American countries; and iron and steel- from mineral-rich or resource-rich countries in Africa and Latin America, via China.

    As well, any trade or tarriff barriers will ensure that the US applies the same to investments within India. Something we can ill afford, given the US accounts for an ever-growing share of some 21% of India's FDI.
     
  13. amoy

    amoy Senior Member Senior Member

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    Armand, your trick is to divert attention from Ohio . That doesn't help our Indian friends.

    do open your eyes and relook at the subject Ohio bans outsourcing to India

    As for China, just give u an example our IT support has shifted to Bangalore long long ago at the cost of Chinese jobs too
     
  14. Agantrope

    Agantrope Senior Member Senior Member

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    This is what happens when the doctor was given the same medicine for his sickness. Lets see the big picture what it happens and the trend that is to follow up
     
  15. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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  16. mattster

    mattster Respected Member Senior Member

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    I think its a good decision by Ohio State Govt and more states should follow. Thousands of american programmers are laid-off due to outsourcing.
    People have been out of work for years not months and the anger is building up. The will vote their state govt out if they dont stop this practise.

    I dont think that anyone has a right to lecture the US on free-trade, especially protectionist countries like China and to a lesser extent India.

    The Indian software industry should compete at the INNOVATION level. Despite all the hype, right now the "great Indian Software" company is nothing more than a body-shop for low-end work. I have talked to enough HIB Indian engineers here in the US from places like TCS, Wipro and almost every one of them admits it. I know there are a few small companies doing cutting edge work but it very small.

    As long as there is money to be made in the low-end stuff....the Indian companies will never scale the ladder. They are a very risk-averse culture.
    Plus there is not much funding for startups in India. Outsourcing will eventually move away or run dry.
     
  17. Agantrope

    Agantrope Senior Member Senior Member

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    Enough of your BS. What the hell one know originally about the outsourcing? Dont think that this is a right move, this will eventually harp the US economy further. This is simply a chain reaction. Chinese dont know about the Indian software industry if not come and try it here, else keep it shut. You people are getting low service cost because of people like us, we dont care and we can get up we work from other part of the world. You people end up happily paying some extra bucks

    You dont know whether it is HIB or H1-B visas, i dont care to talk a BS on this issue with ....... Simply i am talking genius with who knows all the damn about the outsourcing. Awake up is already dawn in the US.
     
  18. Rage

    Rage DFI TEAM Stars and Ambassadors

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    Marrone Jezus !

    If we ever did lecture the United States about "protectionism", it'd be because the US has lectured the world about protectionism for the last 21 years.

    "Free trade" ain't "free trade" if it's selectively based. That applies to agriculture, as it does to services and industry.

    A country can only compete at the INNOVATION level if it has the financial resources, the industrial networks, the experience and the multiple-decade-built infrastructure to do so. Your statement of "competition" pre-supposes a lack of, because it implies 'competition' on a plane which doesn't exist. What do you take us for? A bunch of f%^&n' goumah?

    And which economist ever told you 'competition' had to be innovation-based? The guys at Chicago?

    Do us a favor and spare us the hypocritical bull$#it.
     
    Last edited: Sep 8, 2010
  19. sandeepdg

    sandeepdg Senior Member Senior Member

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    Your words sound like you are some authority on international free trade and economic policies !! Can you tell me how is it "free trade" when you ban companies from a particular country from competing on an outsourcing of project ?? Just because we quote a cheaper price to do the job as compared to yours ? It is so damn obvious since we are a developing economy and hence have abundance of cheap labour, when we develop and become equivalent to a developed nation, maybe then our labor costs will be on an equal plane !! And about that "Innovation level" suggestion, then Rage clearly put that such a thing is possible when we have the resources which we don't ! And when we do, that day will be end of the American hegemony on technology, dude ! You will be literally licking our a***s ! :emot15:
     
  20. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Indian IT may remain immune to Ohio ban

    :emot15: :emot15:

    Tata Consultancy Services (TCS), the country’s largest information technology (IT) services company, will remain immune to the US state of Ohio’s ban on outsourcing of government IT and back-office projects to offshore locations such as India. Rather multi-national companies like IBM, Accenture, CSC and HP will be affected more by this.

    Though the US government segment has been a recent focus for TCS, the latter does not have a significant presence in this vertical. TCS has a centre in Cincinnati, Ohio, where around 400 people work.

    On the other hand, for global companies like IBM, Accenture and HP get at least 13 per cent of their businesses from the US government. For CIBER, which has three centres in India, about 30 per cent of its business comes from the US government.

    While it’s difficult to quantify how much of the US government contracts are offshored, analysts say almost 35 per cent of the overall work (including other sectors) gets offshored. “Revenue generation by employees at offshore sites (these include not just India) should be in the range of 15-20 per cent of the total US revenues of these firms,” said Avinash Vashistha, president and chairman of Tholons, an advisory and research firm.

    “I do not think this will impact the Indian IT service providers, as they do not have any significant presence in the government sector in the US...But if other states follow suit, which seems likely, this will impact US IT services firms like IBM, Accenture, HP and others,” he added.

    While Indian companies are concerned about the ban, many have a different strategy in place to target the US public services, including increasing onshore presence.


    “We are concerned with the recent news from the US about banning offshore outsourcing by the Ohio State government departments. Infosys’ initiative in the public services sector is focused on creating a domestic delivery centre in the US, hence this should not be affected,” said Kris Gopalakrishnan, CEO and MD, Infosys.

    For this, the company is increasing hiring. In 2010-11, Infosys plans to hire 1,000 people in the US.

    “The game plan was to develop local capability and recruit graduate locally and do some of the onsite work in the US from that centre. The centre will also be useful as we start to increase our focus into the government and healthcare segment in the US,” N Chandrasekaran, chief executive officer and managing director of TCS, had told Business Standard earlier.

    Meanwhile, IBM has been steadily cutting jobs in the US and offshoring works to its centres in India, China and Argentina. According to [email protected]/CWA, the official website for IBM Employees Union, the company laid off at least 1,052 workers, or about 1 per cent of IBM’s 105,000-person US work force, in March 2010. In terms of hiring in 2009, IBM hired 13,376 employees in Asia Pacific, 7,112 in Latin America, and 3,514 and 820 in the US and Canada, respectively. Similarly, in case of CIBER, 10 per cent of its overall headcount is in India.

    Unlike its global counterparts, for TCS, the banking, financial services and insurance (BFSI) segment contributes over 40 per cent of its revenue, majority of which comes from the US market, and the government segment has been of low prominence. The situation is similar for Infosys and Wipro. Rather Indian IT service providers have been focusing more on the private sector.

    “We do have some contracts with the US government, rather this is our new focus area... I think such comments and actions are protectionist in nature and they do not fit into the globalised world,” said Suresh Vaswani, Joint CEO of Wipro.

    Agrees Ganesh Natarajan, ex-chairman of Nasscom and CEO of Zensar Technologies. “Most of us do not have a significant presence in the US government segment or the public services. I think this is more driven by the fact that jobs need to be created in the US.”

    “More and more politicians are taking a protectionist stand, but this won’t really impact the offshoring industry to a great extent. That said, Indian firms have reached a stage where they seriously need to consider truly globalising and creating more employment in countries that purchase services from them. Besides a small state like Ohio making an impact on a national level seems unlikely. This might change cost dynamics in Ohio at best,” said Siddharth Pai of TPI.

    Industry body Nasscom said the ban was more to do with election rhetoric.

    “While the public sector represents a small fraction in the overall demand for offshored services, it does represent a future focus area. Ohio’s ban on outsourcing can only be viewed as counterproductive to the US government thrust on reducing public deficit and possibly lead to an increased tax burden on its citizens,” said a Nasscom statement.

    Indian IT may remain immune to Ohio ban
     
    Last edited: Sep 9, 2010
  21. Rage

    Rage DFI TEAM Stars and Ambassadors

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