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Indian IT not afraid of Barack Obama

By | Tuesday, 09 February 2010, 18:49 Hrs | 7 Comments

Mumbai: Indian IT industry which derives nearly 60 percent of its revenue from U.S. is paying no heed to the proposed legislative measures in the country that aim to put brakes on shipping jobs to other countries. India is expected to close the year to 31 March with $49.7 billion in revenue from export of IT and back-office services.

The industry body, Nasscom, says growth in exports for the next financial year would be between 13 percent and 15 percent, reports Livemint. India has a 12 percent share in the outsourcing market and a 51 percent market share in the offshored services market. Still, neither Nasscom nor large Indian firms are willing to take any chances and have employed specialized lobbying firms to highlight to the US legislators the benefits of outsourcing and offshoring.

Tata Consultancy Services (TCS) Chief Executive N. Chandrasekaran said that the proposed legislation, which will withdraw tax incentives to companies that offshore jobs, will not have any impact. "I don't think so," said Chandrasekaran. He added that TCS would be monitoring the situation closely and develop its own strategy.

The anti-outsourcing and offshoring law, in its present form, pertains to the operations of overseas subsidiaries of US companies and the profits they make overseas, said Nasscom President Som Mittal. The Obama administration argues that because the U.S. tax laws offer firms incentives to invest and keep income abroad, American companies tend to reinvest their earnings in foreign locations such as India - expanding there, and depriving Americans of jobs and the U.S. of tax income.

Surjeet Singh, the Chief Financial Officer of Patni Computers, seconded Mittal's opinion and said the proposed legislation is hardly a threat and that the current outsourcing model is mature and can handle minor bumps such as a tax rebate being withdrawn.

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Reader's comments(7)

1: No Barack Obama can stop GROWING INDIA....i am sure people can see the NERVOUSNESS of USA

Posted by:Raghu - 10 Feb, 2010

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job news Replied to: Raghu - 16 Dec, 2010

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3: As per my knowledge, steps were already taken to enter other market places in world. So this was not a surprise to us. Our Business Analysts are really competent to predict any change in trends.

Posted by:Rahul Trivedi - 09 Feb, 2010

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4: Nothing can stop India, neither recession nor outsourcing-restrictions. As far as quality is concerned, there is no doubt about the role of Indians.

Posted by:Dhruv - 09 Feb, 2010

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5: In an interesting article INDIA OUTSOURCING COMPANIES RAMP UP HIRING AS US DEMAND GROWS, ERIKA KINETZ Wrote (The Huffington Post ,10th February 2010):
The employment revival in India's outsourcing sector, which counts on the U.S. for about 60 percent of global sales, comes as unemployment in the U.S. stagnates around 10 percent – near a 26-year high. Inflation-adjusted wages in the U.S. last year fell 1.6 percent, the biggest decline since 1990.
"When there is a downturn the compulsion to control costs increases," said Dipen Shah, an analyst at Mumbai's Kotak Securities. "The demand for offshoring will increase. That will play to the advantage of Indian IT companies."
He argues that the cost savings from offshoring has helped U.S. companies survive – and that's good for the American worker.
"You might say jobs in the U.S. are getting displaced by jobs in India, but because of the value provided by Indian companies and lower costs, there are firms who are able to keep their heads above water and continue to employ their existing employees," he said.

Dr.A.Jagadeesh Nellore(AP)

Posted by:Dr.A.Jagadeesh - 09 Feb, 2010

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job news Replied to: Dr.A.Jagadeesh - 16 Dec, 2010

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Dar sir, i completetly agree with you and effect of slowdown happened in US and europe cuntries is more than asian cuntries bcoz mainly on lifestyle may be they spend more than they earn. if you obseve most affected segment is Banks and automobile many bank shutdown their operations many automobiles secter stops operations.bcoz people who took loan they haven't repayed and they have not purchased hi end cars. if again they get money again they do the same thing this slow down may repeat in future also if they change this life style most of the problem can be addressed.
If i am not wrong all higher end products will be launched in US and europe and expect hi volume of business in that segment Bcoz they dont bother spend more.

Ravi Replied to: Dr.A.Jagadeesh - 10 Feb, 2010

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