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Story URL: http://www.silicon.com/research/specialreports/offshoring/0,3800003026,39125518,00.htm

US Election 2004: Kerry or Bush? No effect on offshoring
It's unstoppable...

By Andy McCue

Published: Tuesday 02 November 2004

The outcome of the fiercely contested and bitter US Presidential election between George Bush and John Kerry will have no impact on offshore outsourcing, according to one of India's leading IT companies.

The customer backlash against the loss of US jobs to offshore locations such as India has become one of the presidential election issues, with Democratic candidate Kerry last week promising financial help for those white-collar workers displaced by outsourcing.

But India's IT industry and new research from analyst house Meta Group predict it won't matter who gets into the White House.

Meta Group said anti-offshore and related protectionist activities have not significantly affected offshore outsourcing, despite its survey of US IT professionals showing that half believe offshoring will increase under Bush and decrease under Kerry.

Stan Lepeak, vice president with Meta Group's outsourcing division, wrote in the report: "Despite each party's position about the merits or ills incurred from offshore outsourcing, the fact is that offshore outsourcing is a manifestation of an ongoing and long-term economic evolution that will not be greatly impacted by either candidate."

Those views are, unsurprisingly, backed by Ramalinga Raju, chairman of India's fourth largest offshore IT company Satyam.

Commenting on whether it would make a difference if Bush or Kerry wins today's election, he said: "Some pragmatic economic reality will remain. I believe the trend for accessing services from across the globe will go on unimpeded."

Raju was speaking to silicon.com in Budapest, Hungary at the opening of Satyam's new offshore development facility for the European market. Initially the centre will have 50 staff as it targets customers predominantly in Germany and France, but Raju said the aim is for it to expand into Satyam's "nearshore" IT services hub for the region.

"We would like to see this centre grow to a substantial size," he said.

Many of the central and eastern European countries are emerging as alternative offshore outsourcing locations for companies who are still looking for labour cost savings without the risk of moving processes as far as India.

Just last month DHL opened its new European IT centre in the Czech Republic, which replaces a number of separate IT operations in the region, including the UK, as part of efforts to slash IT costs by 60 per cent.

New research from analyst Datamonitor into the growth of offshore call centres tips the Czech Republic, Hungary and Poland to become the most established and stable locations in Europe, especially with the deregulation of the telecoms sector in Hungary. But the report warns that Hungary still lags behind its neighbours in terms of a western business culture.