New Delhi: The US state of Ohio has banned outsourcing of government IT and back-office projects to offshore locations such as India. This raises fears of similar moves by other American states struggling to cope with high unemployment rates.
Ohio Governor Ted Strickland issued an executive order, last month, prohibiting "the expenditure of public funds for services provided offshore."
"Outsourcing jobs does not reflect Ohio values," Strickland said. "Ohioans have been among the hardest hit by more than a decade of unfair trade agreements and the trickle-down economic policies that promoted offshoring jobs at the expense of Ohioans who work for a living. We must do everything within our power to prevent outsourcing jobs because it undermines our economic development objectives, slows our recovery and deprives Ohioans and other Americans of employment opportunities."
Earlier, in 2005, the state of New Jersey had also tried to restrict IT outsourcing by passing a law.
Tata Consultancy Services (TCS) is the only Indian company to operate in Ohio as of now. TCS employs about 300 people and gets $ 19 million in tax credit and other incentives for creating local jobs. Infosys and Wipro also have outsourcing contracts with the US.
"We are concerned with 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," Infosys said in a statement.
Last month, the US Congress had passed a controversial legislation increasing H-1B visa fees.
Indian companies earn an estimated $ 50 billion a year in revenue from export of IT and BPO services.