Ohio ban: Sector V reacts

With the state of Ohio banning outsourcing of government IT and back-office projects to off-shore locations such as India, Sector V, still recovering from the repercussions of US recession, has something new to worry about.

The ban was apparently meant to create jobs in the domestic market, since the country's unemployment rate hit a record high at 9.6 percent. "Outsourcing jobs does not reflect Ohio values," declared governor Ted Strickland. However, it escapes no one that Strickland, the Democratic governor seeking re-election, has chosen a populist measure during the poll season.

While the move is expected to hit Indian companies such as Tata Consultancy Services, Wipro, Infosys and Patni, the fear is that the protectionist trend may spread to other US states. Kris Gopalakrishnan, MD and CEO of Infosys, has also expressed "concern" over the ban.

IT executives of Sector V, which is fresh out of the retrenchment phase, are already on tenterhooks. However, it's not just fear that tinges the air here. "It's shocking," says Mrinal Mitra, a software engineer with TCS. Mitra argues that there should be a level playing ground. "Capitalism can't be one-sided," he states.

Are his colleagues worried? "Everybody is," he replies. According to Mitra, a number of his colleagues who were sacked during the slowdown found it very difficult to get jobs thereafter, despite freshers being recruited by the company when the sector recovered.

However, Mitra doesn't expect the ban to cause lasting trouble, in spite of government projects being a focal point for TCS. "It's an election gimmick," he says. Like Mitra, Wipro's Soumya Sinha is banking on the economics of outsourcing. "The main reason for outsourcing is the cost factor. The profit and loss perspective is most important, and outsourcing makes sense in it," says the software engineer.

The Ohio ban doesn't seem to rattle Sinha. "It's not going to happen," he says. Another Sector V executive the news hasn't worried is Anamika Sarkar. "With regard to units that open abroad, a lot of local talent is hired. They will just refine the process," says Sarkar, who works with TCS.

Shock, anger, fear and dismissal—the ban on outsourcing by Ohio government has evoked a motley of responses in Sector V. While some are up in arms, others dismiss it as an economically unviable proposition. However, during the slowdown, many Indian companies began focusing on the government sector. With the ban affecting Plan B, the point of concern is whether other US states will follow suit, hitting Indian IT companies where it hurts.

(Some names have been changed on request)


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