Fearful of again being cast as the villain responsible for job losses in America, India’s booming tech services industry is developing a concerted and early plan in the run-up to the November 2008 race to succeed US President George Bush.
The industry, which makes more than two-thirds of its $31 billion (Rs1,37,020 crore) revenue from American companies continuing to outsource technology and back-office work, plans to lobby senators and congressmen, increase local hiring there and schmooze media and influential think tanks.
These moves, the companies hope, will blunt political opposition to work shipped to companies in India, the so-called “offshoring”, which is widely expected to resurface as a multitude of candidates from both sides of America’s political spectrum—Democrats and Republicans—jockey to win their party nominations for an eventual face-off. Hillary Clinton and Barack Obama, two front-runners among the Democrats, have traditionally opposed American jobs being outsourced though hardly any of the candidates, including from the Republican side, have come out yet with specific position statements. Bush cannot run for office as per US law.
The Indian moves follow a bitter lesson from the 2004 race between John Kerry and Bush, when tech giants, including some of the nation’s largest and savviest companies, were caught flat-footed over a huge political brouhaha about jobs being shipped off to India.
“The fear that the outsourcing rhetoric will surface again is certainly there,” said Sudip Banerjee, president of enterprise solutions at Wipro Ltd, India’s third-biggest software company by revenues. “This time around, we want to be proactive by meeting legislators and telling them the benefits of offshoring.”
Employment of computer programmers, data entry keyers, and software engineers is projected to fall by at least 17% between 2004 and 2015, in large US states, such as California, New Jersey, Colorado, Massachusetts, Connecticut, Minnesota, New Hampshire and Michigan, a Brookings Institution report said last month. The report added that the loss of service sector jobs to outsourcing would in turn squeeze local service jobs.
While reports like this are sure to catch headlines as well as political sound bites in months to come, tech industry representatives here are hopeful that the election would be mostly about the Iraq war and state of US health care.
Still, “the unemployment situation will be a key variable,” admits Kiran Karnik, president of trade body National Association of Software and Service Companies, a powerful industry lobbying group. But, “since the (US) economy is growing and unemployment numbers have not changed, we don’t expect outsourcing to be a big issue this time.”
Yet, Nasscom isn’t taking chances either and plans to make trips to the US to meet key Congressmen, media and research bodies later this year. It is also urging its bigger members to actively participate in community work at the US grass roots level to get local support, Karnik added.
Nasscom members will be keeping a close watch on the battle between Obama and Clinton. Obama, for one, has already chalked out a ‘Real USA’ Corporations Plan, which will reward companies that create quality jobs in America with tax incentives.
Meanwhile, Clinton had said back in 2004 that she was not in favour of outsourcing, adding that the US had to come up with a competitive response to China and India. “I fault us for not being smart enough to know how to compete effectively,’’ she said. A year later, while visiting New Delhi, she also said that outsourcing would continue and that the US was not in favour of errecting fences to free trade.
That stance could change in the coming months as politicians, even from the Republican party, often seen as a more pro-business political group, firm up their poll strategy. “The Democrats are already becoming known as the saviours of the offshoring industry,” said Phil Bond, the chairman of the Information Technology Association of America, a Nasscom-equivalent in the US. That kind of talk is likely to rev up the Republican side to make offshoring a major issue.
The concern over politics comes even as Indian companies continue to sharply increase their hiring in the U.S, a move that could help the industry try and counter criticism.
India’s fifth-largest tech vendor HCL Technologies, with offices in California, Virginia, Ohio, Chicago, New Jersey and Houston, employs around 3,000 in the US, of which just one-third are non-Indians. It plans to double its headcount in the US to around 6,000 people with a significant change in its recruiting pattern.
“Currently, the ratio of our Indian employees vis-à-vis the locals is 70:30. But we are consciously hiring more locals from colleges in the US and driving towards attaining a 50:50 ratio within the next two-three years,” said Anoop Tiwari, HCL’s vice president of global human resources. He attributed the change to large deals—above $50 million—that require a staff presence in both the US and India and customers who prefer a ‘near-shore’ presence to have better control over the outsourced work.
HCL’s bigger rival, Tata Consultancy Services, India’s No. 1 software services company, will hire 1,200 additional locals in North American this year—more than double the 1,000 it has now, driven by customer requirements. “Lots of states have specific rules on under what circumstances you can bring in foreign workers. In those circumstances, it is clear that we have to hire locally,” TCS executive vice-president and global HR head S. Padmanabhan said through a company spokesman.