If the UK government turns to economic protectionism and UK
businesses are forced to buy British IT services they will become
uncompetitive, senior executives of Indian IT suppliers have
warned.
At the
launch of an All Party Parliamentary Group (APPG) designed to
improve trade between the UK and India, IT suppliers spoke about
the dangers of protectionist economic policies.
Protectionist policies could involve governments setting rules
on where businesses that have been bailed out with taxpayers'
moneybuy products and services.
President Sarkozy of France has given French car makers
billions of dollars in exchange for promises not to shut French
plants or sack French workers.
The US president, meanwhile, has a "Buy American" clause in his
$789bn economic stimulus package.
With the US and France introducingprotectionist policies, Indian
IT suppliers saidthis type of policy would harm UK companiesthrough
limiting its IT choices.
Martyn Hart, chairman at the National Outsourcing Association
(NOA), said protectionist measurescould be introduced inthe UK.
"We agree with British jobs for British people, but we are
concerned because we want competitive UK companies and if we
deliberately source from an expensive area we will be
uncompetitive," saidHart.
Raghu Venkatesam, assistant vice-president at Indian supplier
Cognizant, which has 60,000 staff globally, said he expects to see
certain protectionist measures.
"But it needs to be a mix and match approach and work that
involves operational efficiency can still use
offshore companies," he added.
Bindi Bhullar, head of marketing and alliances Europe at Indian
service provider HCL, said that UK companies should not just think
of offshoring IT as an opportunity to cut costs. "If you can
leverage what the Indian firms are doing it is not just about cost
savings and you can actually create jobs."
He cited a joint venture that HCL has with BT in Northern
Ireland that created thousands of jobs. Whether the UK introduces
protectionist measures depends on the US stance, he said. "The big
thing will be how the US behaves."
A S Lakshminarayanan, head of Europe at Tata Consultancy (TCS),
said businesses must be able to access global talent."One has to be
concerned about protectionism, but not too concerned because nobody
in the UK is talking about it," he said.
Conservative MP Shailesh Vara, who is on the APPG, said
protectionismis not the way forward. "We have to ensure we are in a
global market so the UK does not miss out," she said.