PHOTO ABOVE, Ashok Tomar, right, India’s Deputy Consul General in New York, at a seminar on ‘Doing Business With India’ by ATLAS Information Group on March 1. At left is Mark J. Riedy, co-chair of the conference and attorney with Pillsbury Winthrop. (Photos: Arvind Padmanabhan)

Issues surrounding business process outsourcing dominated a two-day seminar on ‘Doing Business with India’ at The Regency Hotel in New York from March 1-2, where experts from legal, taxation, accounting and industry backgrounds spoke of the growing opportunities and the barriers to this new wave in the services sector.

Co-chaired by Dharmesh Pandya of Ernst and Young and Mark J. Riedy of law firm Pillsbury Winthrop, the seminar by ATLAS Information Group was structured to give both an overview and insight into trade, investment and outsourcing opportunities in India for U.S. companies. The speakers not only included experts and industry representatives from the U.S. , but also from India and Britain.

The seminar started with theng address by Ashok Tomar, India’s Deputy Consul General in New York, in which he gave an overview of the economic and political climate of doing business with India.

In his talk that covered topics from the basic macroeconomic trend in the country and second-generation reforms to globalization and the investment climate, Tomar said the Indian labor market offered skills that ranged from basic call center operations to Ph.D’s in mathematics. “Nearly 100 multinationals have research and development facilities in India. Companies such as General Electric have 16,000 people doing R&D work in India, of which 31 percent are Ph.Ds and 44 percent have master’s degrees,” he said.

Max P. Michaels, Crystal Capital

Max P. Michaels, cofounder and managing partner of Crystal Capital, a venture capital firm in New York, defended outsourcing and said, “focus on core competition is what the United States is all about.” He said a recent survey by his company indicated that 260 of the Fortune 1,000 companies have a presence in India.”

Dharmesh Pandya, Ernst and Young

Neil Bhaskar of NovaSoft Information Technology Corp. said before joining the outsourcing bandwagon a company must know the objectives with which it is shifting business processes outside the country. “Don’t outsource a function you don’t understand and don’t rush into outsourcing because every one else is,” he said.

Giving a cost-efficiency comparison, he said, while a software engineer in the U.S. earned around $50-$60 an hour, the same wage rate in India was $6-$10 depending on the skills. Similarly, he said, the going rate of a data entry operator in the U.S. was $20 to $25 an hour compared with $2 to $3 an hour in India.

Douglas Phillips, Covington and Burling

But more importantly, he added, while the workers in the United States viewed such jobs as being low in prestige and therefore less motivating, the same in India were desirable careers with high motivation.

Sridhar Gorthi of Trilegal, Mumbai, spoke of the legal and regulatory issues on outsourcing to India. The Indian government, he said allowed 100 percent foreign direct investment in the business process outsourcing industry with no restrictions on repatriation of dividends.

Units set up in software technology parts enjoyed further advantages such as single-window clearances, tax holiday till March 2009, customs duty exemption on import of capital equipment and priority in government clearances. He, however, added that there were some legal obligations that needed to be addressed such as call centers having to register with the Department of Telecommunications and adhering to municipal regulations and labor laws.

Sridhar Gorthi, Trilegal

Douglas Phillips, an attorney with Covington and Burling of Washington, D.C., spoke of the legal issues surrounding outsourcing to India, mainly on the issue of intellectual property rights and copyright. He said it was important to understand issues such as who would own the intellectual property generated by outsourcing and the copyright laws in other countries, rather than having to face or file litigations.

On the issue of the moves by the federal government and various state to ban outsourcing of at least government contracts to other countries, Phillips dismissed it as “election year rhetoric.” Yet, he said, India may not have many options. “There is a government procurement agreement under the World Trade Organization, but India is not a party and, therefore, cannot claim the protection of that agreement.”

Neil Bhaskar, NovaSoft

Riedy spoke of the adverse government actions facing outsourcing industries and said none of the state and federal bills geared to restrict the export of U.S. jobs overseas have been enacted into law. The only action that has been signed into law is the amendment to the $328 billion Omnibus Appropriations Bill (H.R. 2673) passed by the Congress to provide limited restriction on the offshore outsourcing of certain federal government contracts and signed into law by President George Bush on Jan. 23, he said.

“It is imperative that vendors and customers become involved in fighting these negative legislative and media initiatives, which will only increase. Such proposed legislation, if enacted, could face years of court challenges, thus disrupting your business,” Riedy said.