IACC talks to resolve New Jersey issue

The Indo-American Chamber of Commerce on Thursday suggested discussions at the highest level between the India and the United States administration to sort out the issues relating to New Jersey Bill to prevent outsourcing of any work from public sector enterprises, especially those from India.

IACC president Vinod Chandiok stated that free and frank discussions between the two governments will help appreciate each others' point of view and a mutually beneficial solution will emerge.

"Unfortunately, the issue has been raked up at a time when the US economy is undergoing severe slowdown and there is a possibility of overlooking the economic rationality of business outsourcing," he added.

IACC said outsourcing is a universal phenomenon cutting across industry and services. Presently, it is estimated that $500 billion worth of outsourcing is done annually in diverse sectors, including information technology.

Every country, developed or developing, is engaged in sourcing products and services from abroad due to economic reasons. That has helped the companies, mostly the multi-national companies, to cut down the cost of production, enhance profit margins, accelerate their cross-country investments and increase employment.

IACC president observed that outsourcing, therefore, should be seen as a macro business process. It could be true that in the case of IT-enabled services, India is a major destination for outsourcing the low-ended works like call centers, medical transcription etc because of the large reservoir of talented people and low cost.

There are sectors like consumer electronics and hardware where India's import of raw materials and intermediate goods are sizeable. For instance, major US-based computer hardware companies like Compaq, Hewlett & Packard and IBM have a considerable presence in India and has helped India achieving a predominant position in the IT sector.

Similarly, India uses the platforms and software provided by Microsoft, Sun Micro System, Oracle, Linux etc for their operating systems. IT is a global industry and any effort to limit its operations on geographical basis will be counterproductive.

IACC has pointed out that the US-based companies have set up major call centers in India. The US investors have a considerable stake in these companies. These companies leverage their profit margins by outsourcing the works to centers like India where the labour and infrastructure cost is very less as compared to the United States.

The impact of these cost cutting measures by these companies directly benefit the US investors.

Chandiok said that since 1991 India has been progressively implementing the reform process despite heavy political odds against it.

The developed countries have to give some accommodation to the developing world for taking their reform process to the logical conclusion. Large-scale unemployment that such legislation may create in countries like India will have a direct adverse impact in accelerating the reform process, he suggested.

UNI