US Senate passes law against BPO

In the first federal law against outsourcing, the US Senate passed a law barring the doling out of sub-contracts to India and other countries by US companies to cut costs.

The legal measure, originally sponsored by Republican Senator from Ohio George Voinovich and others, was included in a $328-billion Spending Bill passed by the Senate.

Under the measure, when the US government gives contracts to an American firm the latter cannot give sub-contracts out of that to a source outside the US.

The measure provides that the contract cannot be sub-contracted through the outsourcing mechanism to countries like India, China and Russia to cut costs.

Generally, the contents of such "omnibus" Bills, adopted in a hurry when a Budget measure is long overdue, as in this case, is not changed later and the President does not veto it.

The provision is the first federal law that limits companies from performing contracted work outside the US, ever since outsourcing became a potent political issue in the US a year ago.

Chambers of commerce and other business groups in the US said the move would undercut the ability of US companies to compete with their overseas rivals.