Clearly there’s trouble brewing down under. In yet another in a series of scuffles on outsourcing to India, a local Australian newspaper—the Herald Sun—carried a story on April 22 accusing local Telecom giant Telstra of hiring Indian workers at cut-rate prices.

It triggered off a flurry of reactions both within and outside the company that last year sacked about 4,700 workers in a cost-cutting exercise, ahead of its worst half-year profit since partially privatizing in 1997. This comes on top of the leak of an internal memo of the company that said it was going to save $15-18 million on the outsourcing deal.

The story quoted what it called "a cut-rate Indian worker employed for IT work", as saying he was being paid wages of less than a Aus $1,000 a month compared to prevailing wage levels of Aus $5,000. It said Telstra—with a Federal government holding of 50.1%—was using about 100 such workers employed by Indian giants like Infosys and Satyam.

While Infosys, Satyam and Telstra have denied the Herald story, the issue was quickly picked up by local politicians and labor unions. The Community and Public Sector Union in Australia called on Telstra’s management to "come clean" and said it should be employing local IT workers first. "Telstra is, after all, an Australian company. It’s built by Australians and it’s owned by Australians and therefore it has some obligation to Australia," a spokesperson said.

The premier of Victoria state—where Telstra is headquartered—was quoted as saying the public would be willing to subsidize Telstra if it employed local labor. He said he would encourage Telstra to employ locals "even if that meant some short-term assistance for some long-term benefits in employment to Victoria".

Telstra’s CIO Jeff Smith has said the company has no intention of replacing any IT employees. A paper carried denials from Infosys Australia chief Ananda Rao, quoting him as saying the company would have to shut down if it paid sweat-shop wages, which it didn’t. Satyam told the Australian media and Dataquest that as a respected company that did business worldwide, its salaries were "equal to or better than" industry standards.

This isn’t the first time that outsourcing to India has caused a stir in Australia. In late 2001, the premier of New South Wales, Bob Carr, had a standoff with the country’s minister for foreign affairs, Alexander Downer, for suggesting that Australian companies should outsource to India and exploit the low wages of Indian workers. The reaction of the then Australian labor party spokesman Craig Emerson was reported widely in the press. He had said—"The vigorous promotion of a report designed to get Australian businesses to relocate offshore is a slap in the face of Australian workers trying to compete for jobs in the new economy. At this rate, Australia’s biggest export under the third Howard government will be jobs."

NSW premier had told Downer—"Shred that (outsourcing) report."
Similarly, Infosys chief Narayana NR Murthy faced a series of tough questions during his visit to Australia last year—on how many "locals" the IT services giant would employ in its new development center in Victoria. The media, led by local officials to believe the center would be completely manned by Australians, fired a barrage of questions at Murthy, demanding to know why 60 of the 100 employed in the company’s Melbourne software center were Indians.

TV Mahalingam