The U.S state of Ohio has now banned outsourcing of Government projects to any off-shoring companies outside of U.S. The Ohio Governor has gone ahead and declared:
“No Public Money should be spent on services provided Offshore. The purchase of offshore services with public funds undermines Economic Development, job creation and retention objectives”
Indian Outsourcing companies are already struggling with the sudden steep hike in Visa fees announced by U.S Congress just a few weeks back. Although, Outsourcing ban for Ohio government projects may not affect too many companies severely – the worrisome factor is that, this probably may be start a trend of similar such moves by other states as well.
If at all other states start declaring similar ban on outsourcing, it may cause a dent in Indian outsourcing Industry. Currently, U.S is struggling to cope up with high un-employment rates and many states may be forced to take such steps to calm majority of American people who blame outsourcing as the main cause of Un-Employment.
The low-cost advantage of outsourcing has been fast eroding through-out this decade, primarily due to the fact that software personnel salaries have been consistently rising. Now, with this ban Indian companies will have to employ more local Americans which will further increase the costs.
All is not lost though, the ban if becomes wide-spread will be limited to Government projects, which probably constitute not more than 5 percent. Majority of outsourcing business comes from Private American firms. It is highly unlikely, that private companies will start banning given the cost advantage (atleast as of now) outsourcing services offer.
Anyways, I biggest problem is that on one side, America talks about flat world, open markets and liberalization. On the other hand, they make moves which completely contradicts what they say. It is like a proverb that we have in Hindi
“Dikhane ke daat alag hote hai aur khane ke alag’
What is your view?