Five reasons why legislation to limit outsourcing fails

Outsourcers can adapt to laws looking to cut H-1B use; trade and exports are key economic issues for state, federal leaders

By , Computerworld |  Government, outsourcing

Visa proponents in the U.S. and in India argue that the "50-50" restriction would prompt companies to send more work offshore, not less, though some offshore vendors are telling investors something different.

Wipro recently said that it plans to increase the percentage of locals in its U.S. workforce to 50% in the next two years. The company's Atlanta Development Center now has 500 employees. The new strategy would "reduce the overall dependence" on visas, Sabbudha Deb, Wirpo's chief global delivery officer, said in a recent conference call with investors.

Moreover, Wipro officials believe that hiring local workers could cut costs, because it eliminates the transportation, visa and other expenses associated with hiring Indian workers holding H-1B visas.

Infosys's Balakrishnan called the "50-50" rule a "worst case option. If you don't have more than 50% locals, then you won't get any new visas," he told investors. Passage of the bill would probable lead the firm "to look at accelerating our local hiring," said Balakrishnan.

Three: Exports and trade matter to state and federal government officials.

Ohio's Gov. Ted Strickland is a study in contrast.

In July, the Ohio governor signed an agreement with Exhibitions India Group for up to $108,000 to promote the state "as a premier location" for direct investment and "an excellent place to do business," according to the contract provided to Computerworld by state development officials.

In August, Strickland banned offshore outsourcing by state agencies and received a mountain of bad press in India for his trouble.

It's worth pointing out that Strickland's hiring of an offshore firm to promote Ohio was exempted from his executive order.

When asked by U.S. Trade Rep. Ron Kirk to explain Ohio's position, Strickland said in a letter that "we are very well aware of the importance of trade and we highly value our trading partners. Ohio firms sold $381 million in goods, principally machinery, aircraft, and medical equipment, to Indian markets last year."

Nonetheless, Strickland is also taking on outsourcers during a difficult re-election campaign against Republican challenger John Kasich. Strickland has accused his opponent of being too close to Wall Street and a supporter of outsourcing.

Four: No legislation is likely to change the overall trend toward outsourcing.

The offshore industry generally adapts well to legislative changes that raise their costs. For example, some respond by increasing the hiring of workers in less costly countries, as well as in cities in India.

At the same time the big offshore firms continue to grow at a phenomenal rate.


Originally published on Computerworld |  Click here to read the original story.
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