Many in India cheered Barack Obama's victory
in the U.S. presidential election. But India's technology and outsourcing sector
is watching cautiously to see if a new U.S. administration will implement
policies that will cut down outsourcing from American companies. Anjana Pasricha
has a report from New Delhi.
Over the last decade, Indian companies
have flourished as overseas companies outsource work such as sales calls,
technical help desks, accounting and software development to India. The
country's huge pool of English-speaking graduates and software engineers work at
a fraction of the wages paid in the West, helping to cut down the cost of doing
But there is some uncertainty if work will continue to flow
from American companies at the same pace under a new U.S. administration. During
his campaign, Senator Barack Obama said he will give incentives to companies
that create jobs at home, and stop giving tax breaks to those that ship jobs
Indian finance minister, P. Chidambaram, remains optimistic
that India's outsourcing sector will not be impacted.
"A comment here or
a comment there about outsourcing etc. should not bother us," he said. "Once he
is in office, he will realize that in an interconnected world, countries have to
However, some industry analysts fear that U.S.
businesses, already battling an economic crisis, will reduce work sent to
countries like India. Much of the work is farmed out by clients in the banking,
financial services and insurance sector - many of which are hit hard by the
Others are optimistic that any slowdown in
outsourcing will be short lived. The president of Business Process Industries
Association of India, Samir Chopra, says eventually economic pragmatism will
prevail, ensuring that outsourcing continues to flourish.
"There is a
little bit of uneasy wariness in this entire process, but it going to be very
short term. Eventually what would take over is the economics of the business ...
they would have to necessarily outsource to reduce the absolute cost of doing
business. So outsourcing definitely would bounce back," said Chopra.
Nearly 400 of the world's 500 largest companies outsource some work to
India - and a large chunk of this comes from U.S. clients. Rapid expansion in
recent years has helped the technology and outsourcing sector's earnings to grow
to $50 billion annually. But in recent months, growth has begun to slow, and
many IT and outsourcing companies expect lower profits this year.