India Intelligence Report
 

UK Laws Makes Outsourcing Expensive

 

In a move that could cost Indian business process outsourcing (BPO) companies a huge packet, United Kingdom is introducing a law that will require BPOs to safeguard the rights of worked made redundant because of outsourcing. Britain ’s Transfer of Undertakings (Protection of Employment) regulation (TUPE) will require BPO companies to negotiate indemnity against legal challenges for redundancy payments. The other alternative is to building into its billing the costing of such financing taking away the cost advantage of outsourcing. 

While British politicians, policy makers, and companies have been insisting that off shoring is good for Britain , this surprise move is bound to impact the ongoing process of off shore work. Many Indian companies are expected to walk away from businesses from the UK to avoid the headache of lawsuits and compensation claims.

 

has defined transfer of economic activity if the same job is being performed overseas. Interestingly, this protective measure comes into place when the World Trade Organization Director-General is visiting India and asking it to be more flexible on industrial tariffs. 

India accuses the developed countries of handing out huge subsidies for its agriculturists and industries while denying access to Indian service companies. This law will strengthen the hands of Indian Trade and Commerce Minister Kamal Nath to argue that such protectionism while demanding concessions from India is not unacceptable.