US anti-outsourcing moves not to hit firms

Political opposition in the US to outsourcing has had many IT service providers in India on tenterhooks for the last three years fearing a policy level decision against it.

However, it seems the political opposition from some US sectors will not result in a policy level decision against outsourcing. It is likely that the opposition will subside and take the same course as China.

Sudarshan Venkatraman, Chairman and CEO of Chennai-based Zylog Systems Ltd, which has a major operation in the US with 135 US-based clients, told Business Standard, "For the past three years there has been political opposition in the US against outsourcing work as some sectors feel US citizens are losing job opportunities because of the work being outsourced to countries like China and India. However, it is not likely to affect the Indian IT service provider companies as the US industry has become highly dependent on work outsourcing and cannot survive without it."

On the possibilities of a policy level decision in the US against outsourcing, Sudarshan said, "A policy level decision in the US cannot happen without consulting the industry and US companies cannot make money if they stop outsourcing. These companies will never consent to such an extreme step. In fact, there was a similar reaction in China when some sectors required outsourcing. However, after a little opposition everything normalised and people have accepted the new age corporate need for outsourcing."

Zylog Systems Ltd has 150 clients and 135 are based in the US and the company gets 98 per cent of its business from the US.

Zylog Systems, a company with Rs 403 crore in revenue in 2006 has operations in the US, UK and Singapore with two subsidiaries in the UK and Singapore.

The company is starting its first two offshoring centres in Chennai, of which one will be operational next month and the other will start operations by November next. The investment on setting up the centres will be Rs 75 crore.

The company, which has acquired five companies since it started in 1995, is looking to acquire two more companies.

On this, Sudarshan said, "We are planning to acquire two more firms shortly. One will be UK-based and the other US-based. We have shortlisted the companies."

He, however, did not divulge the names saying it might be too premature to give out the names at present.