In the first Federal law against outsourcing, the US Senate has passed a law barring subcontracts to India and other countries by American companies to cut their costs.
Under the measure, when the Federal US government gives contracts to an American firm – as it has to on public money – that firm cannot give subcontracts out of that to a source outside the United States. The provision is the first Federal law that limits companies from performing contracted work outside the US.
According to Datamonitor, the biggest BPO spending in 2003 came from the US government which accounted for $18.5 billion worth of contracts. However, Datamonitor’s research found that only 1.4 per cent of deals in 2003 involved offshore delivery.
According to Nasscom, the business impact of the move would be little to nil, as federal outsourcing that comes to India is very small and is in the range of less than two per cent of India's export revenue.