Indian trade body objects to Ohio offshore outsourcing ban

The move by Ohio follows a hike in U.S. visa fees, raising Indian fears of protectionism

India's National Association of Software and Service Companies (Nasscom) on Wednesday described Ohio's ban on offshore outsourcing as discrimination against Indian outsourcers.

An executive order from Ted Strickland, the Democratic governor of Ohio, has banned the expenditure of public funds for offshore purposes.

State officials must at all times remain focused on initiatives that create and retain jobs in the U.S. in general, and in Ohio in particular, specially during Ohio's continuing efforts to recover from the recent global recession, the order said.

Nasscom said that it was studying the legality of such a bill being passed by a state government. The trade body is leading a delegation to the U.S. later this month and will be taking the issue up with relevant officials in the U.S. It will also seek support from Anand Sharma, India's minister for industry and commerce, who is visiting the U.S. at the same time.

The move by Ohio has alarmed Indian outsourcers as it comes a few weeks after the U.S. passed legislation that increased visa fees to pay for border security.

U.S. President Barack Obama signed into law last month a $US600 million bill for increased surveillance of the U.S.-Mexican border to prevent illegal immigrants. The funds for these measures are to be raised from an increase in visa fees paid by tech workers brought into the country by companies with more than 50 staff, and in which more than 50 per cent of the staff are on these visas.

Indian outsourcers move staff in large numbers temporarily from India to the U.S. to work on clients' projects. Although the total additional cost to Indian outsourcers from the hike in visa costs is only about $US200 million, the move by the U.S. has led to fears of increased protectionism in the U.S. in the run-up to midterm elections in the country.

The Indian government said at one point that it may approach the World Trade Organization (WTO) to object to the hike in visa charges.

India's second-largest outsourcer, Infosys Technologies, said on Wednesday that it was concerned about the Ohio decision. Infosys' initiative in the public services sector is however focused on creating a domestic delivery center in the U.S., which should not be affected, the company said.

Like Infosys, a number of Indian outsourcers have acquired companies in the U.S. or expanded operations there, both worried about U.S. protectionism, and also because they need skilled U.S. workers for high-end work that requires a local presence.

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