US bill irks Indian software sector

BANGALORE: Nasscom criticised a United States Senate bill that imposes curbs on overseas outsourcing of government business, calling it an attack on free trade.

"We are dismayed to learn about the Bill in the U.S. Senate that restricts offshoring of work contracted by the U.S. government," Kiran Karnik, president, Nasscom, said in a statement.

"The bill is yet to become law, and we hope that wiser counsel will prevail," Karnik said.

However, Nasscom said the business impact of planned U.S. restrictions on outsourcing would be "very small" as the share of U.S. federal government contracts in Indian software exports was less than two per cent.

India's software service industry and an accompanying sector that runs call centers and back-office work conducted over high-speed telecoms have been growing aggressively, triggering protectionist talk in the west.

The industry's exports, based on strong English language skills and cheaper wages, grossed $9.5 billion in the year to March 2003, and are expected to grow at least 26 per cent in the current fiscal year to March 2004.

While recent state-level bills in the U.S. have been minor irritants for India, the federal bill this week in an election year for both United States and India caused unease between the two nations warming up as strategic partners.

Alarm bells have been sounded in the U.S. over a potential loss of jobs in the services sector to India, while China is already seen as having taken a huge chunk of manufacturing jobs.

On the Indian side, where a huge economy has become increasingly globally integrated due to a decade of reforms, fresh fears have arisen over whether Washington is unfair in trade.

Karnik said India's government had itself awarded computerization contracts for its income-tax department to U.S.-based companies, raising a hint there was scope for retaliatory trade action.

"Such a Bill is not in keeping with the increasing globalisation of trade, which benefits all countries, and is contrary to the spirit of free trade being promoted by the World Trade Organisation and long espoused by the United States," the statement said.

Bangalore-based companies like Nasdaq-listed Infosys Technologies Ltd and New York-listed Wipro Ltd have been among leading gainers from outsourcing by U.S. Fortune 500 giants.

Infosys COO Kris Gopalakrishnan said in a statement that his company had no U.S. government work but that he would be monitoring the situation.

© Reuters