Wednesday, June 8 2005 14:16 Hrs (IST) - World Time -

Bangalore: India's booming $5.2 billion Information Technology Enabled Services-Business Process Outsourcing (ITES-BPO) exports industry is pushing the Government to enact laws and safeguards, which address contemporary issues pertaining to information and data security.

ITES-BPO players feel that the absence of 'specific' data protection laws in India is a "major deterrent".

While the Indian regulatory authorities are yet to frame specific regulations for the BPO industry, the key law that impacts BPO companies is the Indian IT Act 2000, according to president and CEO of EXL Service, Rohit Kapoor.

Though the absence of any 'specific' data protection laws in India is a major deterrent, most Indian BPO companies have circumvented this potential issue by ensuring that they adhere to major US and European regulations that have become the defacto global standard for the BPO industry.

According to vice-president of National Association of Software and Service Companies (NASSCOM) Sunil Mehta, the growth of this industry is dependent on how clients perceive the regulatory environment.

NASSCOM President Kiran Karnik informed the NASSCOM ITEW-BPO strategy summit 2005 in Bangalore that the industry body is in conversation with the Ministry of Communications and Information Technology to introduce amendments in the existing IT Act to address the concerns expressed by this industry.

Mehta said no degree of compliance to the US, or UK regulations would lend comfort to the clients as would a comprehensive Indian IT Act, which takes into account legal requirements in client countries.

"Information security and compliance will continue to be the dominant topic in the ITES industry," he said.

Kapoor suggested making the existing IT Act more effective by removing the existing lacuna and strengthening data protection and privacy rules.

According to International Tax Partner, PricewaterhouseCoopers, Vivek Mehra, though the Indian IT Act makes unauthorised use of data a punishable offence, there are concerns about its timely enforcement given the slow pace of the country's legal system.

"The Government needs to be proactive in keeping the IT Act in sync with advancement in technology and put in place a speedy legal recourse system," Mehra said.

NASSCOM officials said Indian ITES-BPO exports registered a growth of 44.5 per cent in 2004-05 clocking revenues of $5.2 billion, and are forecast to grow at approximately 41 per cent to $7.3 billion in the current financial year.

This industry employed 3.48 lakh people in 2004-05 and is expected to go up to 4.7 lakh in the current fiscal, according to NASSCOM.