US ban on outsourcing unfair: PM

7.5 million jobs created in 2003, says Vajpayee

Turning the political backlash against outsourcing in the US to the advantage of the National Democratic Alliance (NDA) government, Prime Minister Atal Bihari Vajpayee voiced his disapproval of laws "which were unfair" to India in the infotech sector and said it was because of his government's policies that 7.5 million new jobs were created in India in 2003.

Describing "not fair" the recent US Federal law banning outsourcing of jobs to other countries including India, Vajpayee said there should be open competition in the IT-enabled services sector.

"Some countries are bringing laws to ban outsourcing. This is not fair," he said addressing a gathering without directly referring to the Federal law voted by the US Senate last week, which had the effect of debarring Federal agencies from outsourcing work.

Pointing out that there was a time when developed nations used to ask developing ones to liberalise their market economy, the Prime Minister lamented that such laws were being enacted at a time when Indian youth were creating their niche in the infotech sector worldwide.

But, he sounded a warning on quality when he said it was an era of competition and "only the best will survive," (Pratiyogita ka zamana hai, jiska maal achcha hoga, wahi bikega). "I know Indian goods are the best in the world and the economy is buoyant," Vajpayee said.

"I have heard Indian computer engineers have captured the Silicon Valley of the US. But now we can find more computer engineers in Bangalore than in Silicon Valley," the Prime Minister, who was here to inaugurate a tribal institute, said. He also announced a special grant of Rs 1 crore to the tribal institute.

The Prime Minister hailed the high-growth information technology industry and its contribution to the economy, noting that during 2002-03, infotech exports stood at Rs 47,000 crore.

In 2003, 75,000 jobs were created in the infotech industry alone, Vajpayee added. "This shows employment opportunities are also generated along with money".

Vajpayee dismissed the Opposition's contention that unemployment was growing due to economic reforms. "This propaganda is not right. Every year, we are generating nearly 8 million jobs," he said.

The ban on outsourcing by US federal agencies could not have come at a better time for the NDA because it gives yet another political issue to the government to campaign for.

Rallying people against a ban on outsourcing work cannot be opposed by the Congress""in fact, the party has to back it""with an election now officially in season.

However, the indications are that outsourcing as a political issue is going to gain greater momentum as the US Presidential election draws near and the central issue becomes unemployment.

In InformationWeek magazine, an article in December 2003, predicts that not just IT services but legal research and other back-office work may be among the next set of white collar jobs to move offshore.

The article cites research at University of California at Berkeley to say that legal assistance and paralegals in India cost about a third of what their US counterparts are paid and therefore, some of the largest law firms in the US are looking to take advantage of this gap.

Simultaneously, several groups have sprung up in the US to prevent "creeping protectionism" that legislation banning outsourcing represents. Policymakers in the US say legislation that seeks to impede offshore outsourcing "will undermine efforts to open new markets overseas" and invite "some form of response and retaliation" by foreign nations.

Representatives of trade groups argue the US job protectionism prevents companies from investing in new areas and ultimately hurts innovation and job growth.

Earlier, Chief Minister ND Tiwari announced a grant of Rs 50 lakh for the institute, which was inaugurated by the Prime Minister yesterday.