Currently, the US is the biggest investor in Indian IT services,
with major players like IBM and Accenture taking advantage of
India's cheap labour costs – almost an eighth of wages in the
US.
According to a recent study into business process outsourcing,
reported on Silicon Valley Business Ink, someone working in a
technical support call centre would be paid $1.50 in India and over
$15 in the US, while a Java programmer in India is paid $3.50 per
hour, compared to $25 pre hour in the US.
European firms are severely restricted in terms of the Data
Protection Directive of 1995 as to what data can be transferred or
stored in countries without equivalent rules and enforcement
procedures. At present, India has no such regulations, and relies
on individual contracts negotiated between the main company and the
Indian outsourcing contractor to address the data protection
issues.
In the US, there is unease over data security in outsourcing. In
June the states of New Jersey, Maryland, Connecticut and
Washington, were considering legislation to prevent the
transmission of data to developing nations.
Accordingly, the Indian government has been urged to provide the
EU and US with the reassurance they need, particularly in light of
the growing pressure on governments in both continents to limit the
export of jobs.
According to a report in The Times of India yesterday, the
Indian Government is not likely to bring into force a data
protection act as such, but might amend existing legislation, such
as the country's Information Technology Act 2000.
The preferred approach, according to The Times of India, is to
negotiate a safe harbour agreement with the EU, along the lines of
the safe harbour agreement that currently exists between the EU and
the US.
Under that safe harbour deal, US companies can voluntarily
adhere to a set of data protection principles recognised by the
Commission as providing adequate protection and thus meet the
requirements of the Directive as regards transfers of data out of
the EU.
Although participation in the safe harbour is optional, its
rules are binding for those companies that decide to join, and
compliance with the rules is regulated, in the US, by the Federal
Trade Commission and (for airlines) of the US Department of
Transportation.
The Times of India reports that the Indian Government's
department of IT is corresponding with Indian ambassadors in both
the EU and US over the proposal. Nasscom, India's National
Association of Software and Service Companies (NASSCOM), has also
been asked to develop best-practice guidelines to assist companies
in this area.
