Ohio outsourcing ban is trade barrier: India Inc

The Indian IT sector, which gets 60 per cent of its export revenue from the US, on Wednesday said the move by the state of Ohio to ban outsourcing by government departments to offshore locations like India is discriminatory and amounts to a trade barrier.

Through an executive order last month, Ohio Governor Ted Strickland prohibited the expenditure of public funds for services provided offshore.

The move comes ahead of the impending visit of US President Barack Obama to India in November. It also follows a controversial legislation (border security law) increasing H-1B and L1 visa fees, hitting India's over $50 billion IT industry.

The Indian industry will take up the issue with its US counterparts and seek government support to flag it with the American authorities.

"Nasscom is leading a delegation to the US later this month and will be taking this up with relevant officials in the US," the apex body of the IT and ITES industry said.

Nasscom said it would also seek support from Commerce and Industry Minister Anand Sharma, who is visiting the US later this month. Sharma is likely to take up the matter with the US Trade Representative and other senior officials.

It said since international trade is a federal subject in the US, Nasscom is studying the legality of such an order by a state government.

"Ohio's ban on outsourcing can only be viewed as counter-productive to the US government thrust on reducing public deficit. It only reinforces our stand on discrimination," it said.

Nasscom said it would not be surprised if more such 'electoral rhetoric' follows in the run-up to the November elections to the US Congress and Ohio Governorship.

Infosys Technologies, the country's second largest software exporter, said, "We are concerned about banning offshore outsourcing by Ohio State government departments."

Ganesh Natarajan, the chairman of the CII national committee on IT and the CEO of Zensar Technologies, said that while the Ohio development would not have much of a financial impact on IT firms, the issue would be taken up with the US trade mission visiting India this month. Indian IT firms earn most of their revenue from the private sector in the US.

Despite these irritants, the US would remain the major market for Indian IT firms, he said.

Assocham said the Ohio ban amounts to a trade barrier and the move would be against the US's interest.

Infosys, the country's second largest software company, on Wednesday expressed concern over the Ohio state government's move to ban IT outsourcing to offshore locations such as India.

Infosys CEO and Managing Director Kris Gopalakrishnan said, "We are concerned about 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," he said.