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IT sector keeps tabs on U.S. election
By siliconindia
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Friday, 11 July 2008, 18:07 IST
Mumbai: As outsourcing debate is making buzz on discussion tables, the Indian IT sector is keeping a tab on not only how the U.S. economy shapes up, but also how the U.S. presidential elections pan out. Both the factors will have a great bearing on the future of Indian IT sector, especially BPOs in the country.
The ongoing concern is as to whether the next U.S. president will decide to give tax breaks to companies that ship jobs out of the US, or to companies that invest in the U.S., says an Angel Broking report.
It is clear that off-shoring might not have an easy ride at least until the U.S. elections scheduled for November 2008, comes to a close.
The fear is that the so called protectionist Barack Obama might introduce policies unfavorable to companies outsourcing their jobs, said another analyst with a broking firm.
Once such a deterrent policy is in effect, the companies in the U.S. would be more hesitant to give jobs to people in other countries, said Anurag Purohit, IT analyst with Religare Securities. "There will certainly be a sentimental impact on IT stocks as the political stand of one of the U.S. Presidential candidates is towards protectionist policies," he said. It means that the future growth of IT companies is at risk in that case, he added.
Since the primary selling point of Indian BPOs is the cost benefit they get when overseas companies outsource to them, the BPO sector will take the hardest hit in such a condition.
Reflecting the trend, the BSE-IT index lost more than 13 percent over the first quarter of the fiscal, while the Sensex lost around 14 percent in value over the same period. While the benchmark index Sensex fell by more than seven percent over the last month, BSE-IT was down by 4.20 percent.
The IT sector is also seeing the positive impact of rupee depreciation over the quarter, and it is going to be the determining factor in the coming times also, said analysts.
