In a move of what is said to cope with high unemployment rates, the US state of Ohio has banned outsourcing of government IT and back office projects to offshore locations such as India. This comes ahead of the November elections approaching in the US. “The Democrats are reportedly behind the polls and are trying to make headlines that will improve their position”, says Rodney Nelsestuen, Sr. Research Director, TowerGroup. “Since the economy is getting the most attention of any issue the county faces, whatever can appear to create jobs will play well, he added”. Indian IT giants Infosys Technologies, Wipro and Patni Computer Systems face a challenge now, particularly if it inspires other states to limit foreign outsourcing of government work.

The ban comes after it was discovered that Parago Inc., a Texas-based company hired by Ohio Department of Development to monitor a rebate program for new energy-efficient appliances, used call center workers in El Salvador. This prompted Governor Strickland to pass this order, in a bid to pre-empt further use of public funds for offshore services. States such as Virginia are also facing a massive backlash against outsourcing. West Virginia Public workers Union, last week filed a lawsuit against proposed outsourcing of IT jobs by the state’s office of technology. Ohio’s move adds to the perception that it involves serious loss of jobs. They are now making serious efforts to hire more Americans and keep much of the work stateside.

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For the critics of outs ourcings, this should come as a news that India created 300,000 jobs in US.

This was told by Commerce and Industry Minister Anand Sharma at a press conference at the Willard Intercontinental Hotel in Washington after his meetings with US Trade Representative Ron Kirk and Commerce Secretary Gary Locke.

Mr Sharma said “About 100 Fortune 500 companies have their research and development hubs in India and 220 of them source their software from India. Don’t forget India has a huge information technology industry, (so) where does the hardware come from”

“That’s why any protectionist barrier is dangerous,” Sharma argued.

He said, “Indian industry in the five preceding years has invested over $106 billion in the US and created 300,000 jobs. IT industry alone has created 250,000 jobs in America.”