Ohio Bans Outsourcing To Offshore Locations, India Concerned

The US state of Ohio has banned outsourcing of government IT and back-office projects to offshore locations such as India. This raises fears of similar moves by other American states struggling to cope with high unemployment rates.

Ohio Governor Ted Strickland issued an executive order, last month, prohibiting “the expenditure of public funds for services provided offshore.”

“Outsourcing jobs does not reflect Ohio values,” Strickland said. “Ohioans have been among the hardest hit by more than a decade of unfair trade agreements and the trickle-down economic policies that promoted offshoring jobs at the expense of Ohioans who work for a living. We must do everything within our power to prevent outsourcing jobs because it undermines our economic development objectives, slows our recovery and deprives Ohioans and other Americans of employment opportunities.”

Earlier, in 2005, the state of New Jersey had also tried to restrict IT outsourcing by passing a law.

Tata Consultancy Services (TCS) is the only Indian company to operate in Ohio as of now. TCS employs about 300 people and gets $ 19 million in tax credit and other incentives for creating local jobs. Infosys and Wipro also have outsourcing contracts with the US.

“We are concerned with the recent news from US about banning offshore outsourcing by Ohio State government departments. Infosys’ initiative in the public services sector is focused on creating a domestic delivery centre in the US hence this should not be affected,” Infosys said in a statement.

NASSCOM in a statement said that while the public sector represents a small fraction in the overall demand for offshored services, it does represent a future focus area. Globally governments are beginning to see the benefits that can be reaped out of employing Information Technology in public services. India too is opening up not only in IT, but other areas, representing a growth market for global and domestic companies. Ohio’s ban on outsourcing can only be viewed as counterproductive to the US government thrust on reducing public deficit and possibly lead to an increased tax burden on its citizens.

Last month, the US Congress had passed a controversial legislation increasing H-1B visa fees. Indian companies earn an estimated $ 50 billion a year in revenue from export of IT and BPO services.

ibnlive.com