Kiran Karnik, Nasscom President

MUMBAI: The rising political reaction in the United States to the loss of some American jobs to workers overseas is creating a whiplash effect among India’s leading technology companies.

“The dramatic buildup of opposition before the U.S. elections is disturbing,” Jaithirth Rao, the chairman of a leading software and call center company, MphasiS BFL Ltd., said in an interview at the three-day annual meeting of Nasscom, India’s software industry trade association.

MphasiS, based here, has 6,000 employees and its operations are spread across the cities of Bangalore and Pune. More recently, it has expanded to Shanghai, China, and Tijuana on the Mexican border with the United States.

Companies like MphasiS are the biggest beneficiaries of a movement among many of the largest corporations in the U.S. to shift certain white-collar work to low-cost India, where local companies are adding thousands of skilled, English-speaking employees every quarter to meet the increased demand. At the same time, companies like General Electric and Microsoft are expanding their operations in India on everything from basic customer service to high-end research and development.

The political reaction in the United States against such outsourcing has built rapidly in the last year; nearly two dozen states have voted on legislation to ban government work from being contracted to non-Americans.

More recently, the U.S. Senate approved a bill aimed at restricting outsourcing of contracts from two federal departments. The House has not acted on similar legislation.

“We are concerned that this is federal legislation, and that it is sponsored by a Republican,” said Kiran Karnik, president of the software association. “Republicans are traditionally free marketers.”

Karnik, who has been vocal in promoting the cost-saving advantages of India’s work force, said he was perturbed that “all of the election-year rhetoric equates offshoring with job losses.”

Over 70 percent of India’s software export revenue comes from companies based in the U.S., but less than 2 percent of India’s export earnings comes from work for American governments, and the software and related services industry accounts for only 3 percent of India’s economic output.

Still, the industry is increasingly associated with the Indian economy’s upbeat mood, and its leaders are anxious. As fears of American white-collar job losses continue to rise, they say, the issue is expected to become a sticking point in trade negotiations between India and the U.S.

In a further indication that outsourcing is likely to be an increasingly touchy subject here, Robert Blake, the U.S. charge d’affaires in New Delhi till recently, said in February that India’s best response was toits markets wider to help create other jobs in the United States.

Blake’s remarks rankled India’s government. “That is not the way to go,” said Yashwant Sinha, the external affairs minister. “It smacks of retaliation that, ‘If you don’tup, we will impose restrictions,’” Sinha told reporters. “The United States has to realize that by outsourcing, its companies remain competitive and save jobs.”

(By Permission, The New York Times)