New Delhi: The US’ rhetoric against India’s information technology (IT) and business process outsourcing (BPO) industry has reared its head again, with a Bill called the “US Call Center Worker and Consumer Protection Act” that has been introduced in the US house of representatives.
The Bill proposes to make offshoring call centre operations “ineligible for any direct or indirect federal grants or guaranteed loans for five years”.
New barrier: A file photo of a call centre. By Hindustan Times
Indian IT-BPO companies, industry bodies and government representatives expectedly were disappointed with the Bill, while noting it was only another attempt by US lawmakers to dissuade outsourcing apparently to protect American jobs.
The Bill, introduced by representative Timothy Bishop along with three others on 7 December, wants firms to notify the US department of labour four months ahead of shifting a call centre to a location outside the US. A violation will result in a penalty of $10,000 a day. The labour department will also maintain a publicly available list of all employers that relocate call centres.
Also, the Bill wants all call centre agents to identify their locations before beginning a conversation with a customer, who will have an option of being transferred to an agent based in the US.
“We are naturally concerned about such a development and are watching how the matter proceeds,” commerce secretary Rahul Khullar said.
The National Association of Software and Services Companies (Nasscom), in a statement on Wednesday, expressed disappointment with the US adopting measures “that restrict free trade and establish discriminatory trade practices”.
“The possibility of the Bill becoming a law is very low,” the IT lobby group added. “But it indicates the mindset of a certain set of policymakers and could set the tone for the next year, especially it being an election year.”
Industry experts blame the global slowdown and the forthcoming elections in the US for the rhetoric.
N.V. Tyagarajan, president and chief executive officer (CEO) of India’s largest BPO firm, Genpact Ltd, said “thousands” of such Bills have been introduced in the US, but few have seen the light of day. “What is also important to note is that this Bill will just not impact India, but also places like Latin America, Ireland, the Philippines and Canada, which support huge outsourcing operations,” he said. “So it is not just targeted at India.”
But if passed, the legislation could deal a blow to India’s BPO industry, especially small firms, say industry experts.
Keshav R. Murugesh, group CEO, WNS (Holding) Ltd, said the BPO company is evaluating opening a delivery centre in the US to cater to the onshore outsourcing requirements of its clients. “Notwithstanding the above, we believe that legislation such as the one recently introduced could ultimately impact the competitiveness of American businesses,” he said.
Mumbai-based BPO Aegis Ltd, a part of the Essar Group, said it has joined a forum called Jobs4america, pledging to create 4,000 jobs in the US over the next two years.
The company said the proposed new law “will have no implication on our operations. Aegis is a global organization with delivery centres spread across 12 countries. We are location agnostic and the clients are free to choose the location of their delivery centre”.
India’s IT and BPO industry has time and again been the target of such legislation, which seek to curb outsourcing as a means to protect jobs in the US. Soon after taking office, US President Barack Obama talked about ending tax sops to companies that ship jobs abroad. In early 2009, senators Dick Durbin and Chuck Grassley introduced an item of legislation that prohibited employers from hiring additional H-1B and L-1 guest-workers if more than half of their employees were H-1B and L-1 visa holders. The Comprehensive Immigration Reform Bill, supposed to address various business visa-related issues, is yet to come up.
In August 2010, the US hiked the fee for H-1B and L-1 visas to fund its $600 million Border Security Bill. Indian commerce minister Anand Sharma protested the move in a letter to US trade representative Ron Kirk. “Though the need of the US government to strengthen its border security is understandable, it is inexplicable to our companies to bear the cost of such a highly discriminatory law,” he wrote.
During Obama’s visit to India in November 2010, he promised to reduce the trade barrier between the two countries, but in just a month, the US senate passed a Bill to extend the period for higher visa fees from four years to five years till 2015.
Sharma again raised the issue with Kirk. The Bill caused “considerable apprehension and concern to Indian industry”, he had said. “Though we understand that the legislation falls within the sovereign domain of a country, the passing of such a legislation would, to my mind, be a retrograde step for greater trade engagement.”