Currently, the US is the biggest investor in Indian IT-enabled
services, with major IT players such as IBM and Accenture taking
advantage of India's cheap labour costs.
According to Reuters, software engineers with two years
experience in India are being paid about one-fifth of an equivalent
US employee – around 25,000 rupees per month, or $533.
However, 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. And question marks remain over the security
of the systems and policies used in developing countries.
In the US too, there is unease as to data security. The states
of New Jersey, Maryland, Connecticut and Washington, are now
considering adopting 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. An Act is being drafted
to tighten India's data protection regime.
In a recent interview with Indian newspaper The Financial
Express, Kiran Karnik, the president of the National Association of
Software and Service Companies (NASSCOM) said, "The threat from EU
is greater than it is from the US, and this Act will help us retain
our position in the EU markets."
He explained, "We see the ban on outsourcing and visa-related
allegations against software companies as a threat faced by the
developed countries on the employment front. However, the cost
benefits offered by [India] are immense and outsourcing is on the
rise."
The Indian Ministry of Information Technology and NASSCOM are
preparing the draft legislation with a view to it coming into
effect within a year.
