Outsourced BPO jobs from US and UK has 50% growth rate year over year in spite of backlash and opposition
Sanjiv Mittal, Special Correspondent
July 23, 2004

In spite all hoopla about outsourcing of software and business process reengineering jobs to India from the US and the UK, it is growing by 50% year over year. While John Kerry might challenge it somewhat in coming months and (if he wins) in coming years, the economic advantage and necessity is so deep that it is unstoppable. As the West just discovered English-speaking hardworking Indians, their economic problems and continuing price escalation inability is forcing them to ship jobs oversees.

The reason for outsourcing is inefficiency. If software engineering was efficient like Electrical or Mechanical Engineering is, there will be no need for outsourcing. The problem lies in system specification and construction linkages. The specifications change so rapidly that it is almost impossible to control the cost without having access to cheap labor.

Allaying any apprehension on US moves to curb business process outsourcing (BPO) to India, Government told the Rajya Sabha (Upper House of India) that it would have a limited effect and BPO volumes to India were slated to touch $3.6 billion in value terms during 2004. Commerce and Industry Minister Kamal Nath told the Upper House during Question Hour that despite the moves towards such restrictions, the BPO business to India was growing at a rate of 40 to 50 per cent annually. The Minister said the Government had taken up this issue very seriously with the United States Trade Representative and US Secretary of State Colin Powell. He said US President George Bush and Chief of Federal Treasury had also expressed concern over the rising outsourcing to India. He said as much as 70 per cent of India's BPO business comes from the US and only two per cent of the business relating to US Government contracts was affected due to a legislation approved in the US Congress. In reply to a query, Nath said the job outsourcing to India was worth $2.35 billion in 2002 and it was expected to touch $3.6 billion annually in 2004.

The US Corporations are continuing to pump the outsourcing business to maintain inefficient legacy systems, which becomes extremely costly to operate and maintain in India. The remedy may lie is smarter and better software engineering in US. And interestingly, it is happening slowly but surely.