Outsourcing is looking more attractive as manpower within IT departments continues to be stretched to the max.
With 'value for the dollar' the current mantra, India is being hawked as the quickest way to save a few bucks.
A report, by the Department of Foreign Affairs and Trade's Economic Analytical Unit, India: New Economy Old Economy, outlines "significant opportunities" for Australian companies to cut costs by investment in, and outsourcing to, the IT-enabled sector in India.
Labor's industry and trade spokesman Craig Emerson also criticised the report, saying it showed the Government had no commitment to creating jobs in Australia's new-economy sector.
"The vigorous promotion of a report designed to get Australian businesses to relocate offshore is a slap in the face for Australian workers trying to compete for jobs in the new economy," Dr Emerson said.
Paul Bassat, CEO of recruiter Seek, said there are a number of talented IT people out of work. "There is no question that there are people struggling to find work.
"It's a hard issue. Ultimately, if companies have to make decisions - such as where is the best place for their IT work to be done - it is really down to individual companies.
"But if the Government is encouraging [outsourcing to India], then it is disappointing and surprising if that is the case."
Federal Opposition Leader Simon Crean has labelled the report short-sighted, claiming it highlights the Government's failure to invest in skills and training in Australia.
The recommendations of the report were appalling considering the depressed state of the local information technology industry, according to IT Workers Alliance deputy assistant secretary Michael Gadiel.
He accused DFAT of promoting India at the expense of Australian jobs.
"I just think IT workers would be appalled to know that their Government is encouraging the outsourcing of jobs that might go to people locally, to overseas, in pursuit of cost-cutting," he said.
Total revenue for India's IT sector is expected to reach about $US11.4 billion in 2000-01, and about 70,000 Indian workers are employed in the IT-enabled sector, specifically looking after outsourced call centres, back-office support and data processing services.
Unlike the Indian software sector, which is tipped in the report to experience skills shortages and wage increases, this sector has a much larger pool of potential employees.
Phil Hassey, senior analyst, Asia-Pacific region IS outsourcing services for IDC Australia, said that savings by outsourcing back-end operations to India could be as high as 70 per cent on labour-intensive jobs. "However, cost savings are hard to quantify. For example, a CRM implementation is quite labour intensive, [so] the integration savings would be quite significant if done in India."
Figures on Australian outsourcing to India now are not available. Companies already outsourcing to India include GE Capital and the ANZ Bank.