Outsourcing issue could get ugly again

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IT Enabled Services and the BPO sector have provided a financial windfall for Indian companies in recent years. By far, their biggest market is the United States. Now, with a new Congress led by Democrats taking over in January, analysts are predicting a renewed political attack on outsourcing.

The 2006 Congressional elections gave the Democrats control of the US Senate and the House of Representatives. And the reading of that result on Capitol Hill could mean that outsourcing will again become a political hot potato next year.

Former Democratic Congressman, Vic Fazio told SAW, "There is a protectionist sentiment rising. I think a lot of it was felt in this election. If Republicans were reelected in many cases, they came back to Washington with a message that the middle class in our country is feeling a wage squeeze."

Job flight or even the appearance of it, is an easy handle for politicians who will want to make the appropriate noises, even if there is widespread realization in America that the trend is irreversible.

Former Republican Congressman, Robert Walker says, "I would say that it's going to be an issue that will get a good deal of play in this Congress. My guess is that any bill that would prohibit outsourcing on its own would end up getting vetoed by the White House and so it may be more of a discussion piece than an actual legislative piece. But it will be something that will be a high-profile political item."

The bottomline is that India's IT and BPO sectors need to gear up for a public relations battle in 2007, together with some serious lobbying on Capitol Hill.

Expect a lot of rhetoric on outsourcing in 2007 especially as major leaders from both the Democratic and Republican parties jockey for populist positions ahead of the primaries for the 2008 presidential elections.

Anirudh Bhattacharyya