‘Obama on outsourcing is no reason to panic’

While US President Barack Obama's statements on curbing tax breaks for outsourcing companies in the US set alarm bells ringing in the Indian IT sector, industry experts believe there is no reason to panic, yet. Obama's statement come at a time when a National Association of Software and Service Companies (Nasscom) delegation is in the US, as part of its annual routine to promote services offered by the Indian IT sector.

Speaking earlier to news agencies from the US, Nasscom president Som Mittal articulated the importance of globalisation to the US economy. "American companies generate more than 50 per cent of their business outside the US. To be globally competitive, they also depend on globally shared services," he said. Mittal is part of the 3-member delegation also comprising Nasscom chairman Ganesh Natarajan and vice-president Ameet Nivsarkar.

Analysts said Obama's comments were primarily directed towards manufacturing companies that outsource jobs. "The impact will be limited on the IT industry. Obama's statements refer primarily to outsourcing being carried out by manufacturing companies. US outsources jobs and services not just to India but also to other nations like China," said KPMG outsourcing advisory head Vishal Thakker. These tax breaks are applicable to companies that repatriate their profits from foreign shores.

Response from Nasscom also played down the feared impact of these remarks. "What Obama has said can have multiple interpretations. Does it apply to companies which have captive centres in India? We do not know," said Nasscom VP Rajdeep Sherawat.

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