Hyderabad: Representatives of India’s software lobby group Nasscom will visit the US next month in the first of three planned visits to meet members of the Obama administration, at a time when business from the US is slowing on account of a recession in that country and any anti-outsourcing wave could seriously hurt software and back-office services companies here.
Although the anti-outsourcing sentiment isn’t as pronounced as it was in the early 2000s, it did surface during the run-up to the presidential elections, with the new President Barack Obama referring to it.
Industry threat: A Convergys office in Gurgaon. Though the anti-outsourcing sentiment isn’t as pronounced now, it came up during the run-up to the US presidential elections, with Barack Obama referring to it. Madhu Kapparath / Mint
Nasscom, slow to react the last time, doesn’t want a repeat, and will also use the services of professional lobbying firms in the US to ensure that the “right information is provided to policymakers”.
Obama imposed new rules on lobbyists, seeking to diminish their influence the day after he became the US’ 44th president.
At least 60% of the $40 billion (Rs1.96 trillion today) that India’s software and back-office services firms earned in 2008 from exports came from the US.
Nasscom president Som Mittal declined to give details of the firms, but acknowledged that his organization has two “well-networked professional firms” to make sure that “our perspectives are given to the (US) decision makers”.
He added that while addressing the fallout of the fraud at Satyam Computer Services Ltd “is not a focus area”, Nasscom’s representatives would discuss “concerns about corporate governance” with US officials, who wanted to discuss this.
On 7 January, Satyam’s founder and former chairman B. Ramalinga Raju had confessed that he had, over the years, fudged the company’s books to the tune of at least Rs7,136 crore.
BGR Holdings Llc. (formerly Barbour Griffith and Rogers Llc.) and Hill and Knowlton Inc. have both been working with Nasscom for a few years. BGR is still on the rolls of Nasscom, but the services of Hill and Knowlton were terminated in April, according to the online filings available at the Lobbying Disclosure Act Database hosted on the US Senate website.
Mint couldn’t find details of the second firm appointed by Nasscom.
During his presidential campaign, Obama promised to put in place policies that would give tax breaks to companies that create jobs within the US while punishing those that shipped jobs overseas.
Nasscom will follow up the February visit with two more in July and October.
At BGR, Robert Blackwill, former US ambassador to India, was one of the lobbyists for Nasscom. In late 2008, Blackwill left BGR to join another research and lobbying firm, Rand Corp. It is not clear whether this will have any impact on Nasscom’s lobbying efforts.
Mint had reported in August that, if enacted, several pending anti-outsourcing legislation in the US could restrict market access for Indian IT companies.
Industry and policy analysts had then expressed the fear that increasing focus on economic recession and unemployment could boost such anti-outsourcing efforts by US legislators.
Mittal said it would be factually inaccurate to blame outsourcing or Indian IT companies for job losses in the US because most of the recent job losses were in sectors such as manufacturing and retail.
“IT sector employment in the US has increased, according to December 2008 data,” he said.
And an expert said it was unlikely the US would turn against outsourcing.
“It is unlikely that the new administration (in the US) will implement any policies that will have a long-term impact on the Indian outsourcing companies. Given the current global economic scenario, everybody needs to be competent and policy changes (that) affect outsourcing will affect the competitiveness of American enterprises,” said Arvind Pandit, director at Hay Group, a consulting firm.
Mittal is counting on that. “Given the shortage of skilled manpower that they face and the cost advantage that Indian companies can offer, outsourcing can help in enhancing the competitiveness of American companies.”
He added: “It is hard to ignore the value proposition that outsourcing offers.”