IT sector in India unruffled over Obamas outsourcing rhetoric

Written by Corporate Bureau | New Delhi, Mumbai, Bangalore, Chennai, Aug 29 | Updated: Aug 31 2008, 04:32am hrs
Terming US' Democratic Presidential candidate, Barack Obama's anti-outsourcing comments as election rhetoric, majority of the Indian IT industry remain unperturbed by his statement to end tax breaks to companies that ship jobs overseas if he is elected to office.

Obama kept up with the rhetoric on the subject that has been a staple of Democratic campaigning in his acceptance speech and said ....unlike John McCain, I will stop giving tax breaks to companies that ship jobs overseas, and I will start giving them to companies that create good jobs right here in America.

There is a huge difference between what people say before the election and after it. This is election rhetoric and expect it to get bigger in the days to come, said Pramod Bhasin, president and CEO, Genpact, India's business process outsourcing firm. Around 60% of Indian IT industry's revenues come from the US. He is talking of tax breaks, there are no massive tax breaks that our customers get anyway, he added.

This seems to be directed at manufacturing jobs rather than technology since America is finding not enough students of science, technology, engineering and mathematics. Also, unemployment is a bigger issue in manufacturing, said Som Mittal, president, Nasscom. There are several companies who have shut down manufacturing units and started factories in cheaper places like China and Mexico, added Ganesh Natarajan, chairman, Nasscom. He said that India is part of the global supply chain and the country's think tank would consider the value addition that India does to businesses globally.

It will depend on the purchase price parity index. A salary $60,000 for an individual in America is equivalent to Rs 3 lakh in India. Therefore tax breaks cannot compensate for the cost, said Deepak Ghaisas, former CEO (India Operations) and CFO at i-flex Solutions.

Aparup Sengupta, managing director & CEO, Aegis BPO Services Ltd also said that the businesses of the companies will continue to be driven by economic factors.