Reacting to US President Barak Obama's overtly protectionist move to debar companies that outsource jobs from certain tax benefits has made the Indian IT industry somewhat uneasy, but not overly worried. The industry feels there is probably more bark than bite in Obama's recent statement that companies outsourcing jobs would not get tax benefits.
"Outsourcing has enhanced the competitiveness of US corporations and has created more jobs within the US economy. The US is a very open economy and a strong proponent of free trade globally. We are confident that the US will not take any measures which might hurt its global competitiveness. We need to wait for more details to understand President Obama's statement," an Infosys spokesperson said.
The National Association of Software and Services companies, the industry's apex body, has also said that this is not a time for protectionism, but for global collaboration, if the world is to come out of the economic downturn quickly. "We hope that all other countries would support this and continue to be proponents of free trade. While supporting international trade, countries, regions, and states have been promoting local investment through tax incentives for job creation," said Nasscom in a statement.
Nasscom said outsourcing has enabled US companies get the technology and innovation edge and access best resources globally. "Global sourcing has helped companies gain the vital competitive edge - time to market, transformation of businesses, integration of processes, reduced costs and enhances efficiency - all of which are key drivers for revival of economic activity," said Nasscom.
"The economic downturn has created turmoil worldwide, impacting businesses and job creation. In the US, unemployment is largely concentrated in the manufacturing, retail, and construction sectors. The technology sector is a part of the global value chain and while affected by the downturn, is still expected to grow as per reports by leading analysts, and unemployment in this sector continues to be the lowest," Nasscom said.
However, Nasscom added that ''It is heartening to note that the US President has supported the need to avoid protectionism in his speech.''
"All efforts of Obama are currently focused on the revival of the US economy. A turnaround in US economy is good news for India. We need not read much into other details of Obama's speech,'' added Nasscom president Som Mittal.
Wipro chief financial officer Suresh Senapaty said, "We endorse Nasscom's view on this and feel that in the current economic environment it is imperative for global corporations to collaborate on technology and innovation. Policies of protectionism will only hinder the revival of the world economy.''
Industry in general agreed that such a move would only hurt the US as outsourcing makes a lot of economic and logical sense. MindTree chairman and managing director Ashok Soota said, "His speech was an extension of what he had spoken earlier in his campaigns. The basic economics and logics of outsourcing have not changed, and therefore it will not impact India adversely.''
Besides, companies are under tremendous pressure to find best cost structures to support their global trade. "Businesses today are more global than ever before and such protectionist measures not only restrict innovation but also hamper the progress of globalisation. Global markets are a two-way street to sell and buy products and services,'' said Sujata Rakhra, vice president (marketing & communication) APAC, Perot Systems.