Indian IT firms help US, Europe companies to save $ 30 billion

Notwithstanding the crusade of the US President Barak Obama to stop the transfer of jobs and work to inexpensive locations and the restrictions imposed by several European nations on outsourcing, Indian IT and BPO firms have not only contributed to the country’s GDP during the last one decade, but also helped several US and European companies to save around $30 billion during the 2009 fiscal alone.

Quoting a study undertaken by NASSCOM, the premier body for the Indian IT and BPO industry, an online report says that while the Indian IT industry has been instrumental in saving $14 to $19 billion and $9 to $12 billion for the US and European firms respectively. Another study conducted jointly by NASSCOM and globally leading research and analytics services provider Evalueserve (EVS) projects that the Indian IT and BPO sector would contribute around 10 per cent of the country’s total GDP during the ensuing decade – a whopping rise from 1.2 per cent in 2000.

The study further states that during the period between 2004 and 2007, the off-shoring model has helped in creating as many as 250,000 direct as well as indirect employments in the US. In addition to creating jobs, the Indian IT industry has also contributed significantly to the US and the UK economies. According to the study, the Indian tech firms had contributed around $42.7 billion to the US economy in terms of taxes and further administrative expenditures in these two countries during 2007 alone.

Meanwhile, another report states that the recent move by the US government to hike the H1B visa fees as well as the decision of the coalition government led by David Cameron in the UK to enforce a restriction on the annual immigration on citizens of nations outside the European Union is likely to affect the growth of tech firms in the developing economies like India and China. Nevertheless, the scarcity of professional talents in their respective countries as well as cost savings have been encouraging the multinationals in the US and the UK to outsource their non-core work to countries like India and the Philippines.

At the same time, the tech firms in India have been working to reduce their dependency on the US-dominated outsourcing market. They have not only been looking to establish footprints in new markets, especially the European countries, but also seeking to expand their business in the domestic market. The study hints that despite the Cameron government’s moves, several British companies intend to outsource their one-third of their IT, finance and call-centre jobs to India, and the remaining to China.