The move came as Australia's largest telecommunications player, Telstra, signed a deal with IBM that is expected to see some 450 Australian application development and maintenance positions outsourced to India under plans to slash hundreds of millions of dollars in costs.
The Australian Information Industry Association also weighed into the debate, calling on the federal government to work with it to develop a cohesive strategy to address the issue of "global sourcing".
India's information technology minister Arun Shourie used a conference of Asian IT ministers taking place in Hyderabad, India, to ask countries in the region to put up a united front against moves to stall offshore outsourcing.
"As we are becoming strong in technology, backlash has started, particularly in the U.S., Europe and Australia," Shourie said. "All of us should tackle this in a concerted and united manner."
In Australia, Telstra described its controversial move as part of plans to extend its outsourcing arrangement with the tech heavyweight. "The decision...represents the next phase of a competitive IT sourcing agenda to achieve reduced cycle times and improved quality and cost-effectiveness," it said in a statement.
Telstra plans to slash AU$800 million in costs over the next three years. According to reports, the shifting of the 450 positions could cut around AU$75 million from the carrier's cost base under its sourcing arrangements.
Responding to the Telstra deal, the AIIA said "as has occurred in other industry sectors such as textiles, clothing and footwear," the information and communications technology sector needed to make some "significant structural adjustment" to take advantage of offshoring opportunities.
In India, more than 30 ministers from Asia have gathered to discuss issues like the digital divide, e-governance and the implementation of broadband. India is using the occasion to showcase its prowess in information technology such as IT products for developing countries.
Recently, Indian industry lobbies decided to take the outsourcing debate to political leaders in the United States. The National Association of Software and Services Companies will hold its next board meeting in New York and later confer with political leaders. Last week, a large congressional group was in Hyderabad -- fast developing into an IT hub and imitating the success of Bangalore -- and other Indian cities to get a firsthand understanding of the technology industry in India. New York Congressman Joseph Crowley, who led this group, suggested that Indian companies should create jobs in the United States to fight the backlash.
Some US think tanks, too, feel that the country should keep its doors open so that technology companies could remain competitive in the global economy. The Computer Systems Policy Project, backed by companies including Intel, Dell and Hewlett-Packard, last week said that "countries that resort to protectionism end up hampering innovation and crippling their industries, which leads to lower economic growth and, ultimately, higher unemployment."
The Indian minister said protectionism is a major issue facing trade talks under the aegis of the World Trade Organization as well. "They cannot expect us to go on opening our markets to their goods, while protecting their own markets and services," he said.
