Phaneesh Murthy, who heads the $1+ billion iGate Corp, was the first to go public with his fears of an Obama re-election when he gave an interview, a day before the results were out, saying it would be ?bad news for India as a whole?.
He went on to spell out the reasons for his view ? the rhetoric, he said, wouldn?t become policy, but the way the compliance and regulatory measures were being designed, more work would have to be done in the US.
And the US remains critical for software ? in the September quarter, 64% of Infosys? revenues came from North America; in the case of Tata Consultancy Services, the north American share of the revenues stood at nearly 53% during the period.
While it is true the anti-outsourcing rhetoric was worse than the bite, during Obama?s first term, the state of Ohio banned outsourcing of its government projects to offshore locations like India.
And this took place soon after the US doubled the application fee for H1-B and L1 visas to about $4,300 from $2,300. The steep rise had impacted the margins of Indian IT companies. Obama was at his vocal best against outsourcing in 2009, when he said the United States seemed to encourage a tax code that enabled an American company to pay lower taxes if it created a job in Bangalore, than in Buffalo.
Yet, Indian CEOs by and large remain optimistic, perhaps something to do with the fact that US firms outsourcing work to India tend to enjoy a 30-40% cost advantage on an average when they outsource IT work to Indian shores.
MindTree chief executive Krishnakumar Natarajan admitted that the rhetoric on outsourcing has been fairly strong during this campaign, but ?there is nothing beyond second term in the US; so, in the present tenure he will be more concerned about results and output rather than its implications.?
N Chandrasekaran, chief executive and managing director of TCS, said, ?Technology will play a strong role in driving the next phase of growth and Indian IT companies will have the opportunity to partner with the US companies to achieve this. Now the focus will be on driving economic growth…this will lead to further job creation in the US and other parts of the world.?
Group chief executive of BPO major WNS, Keshav Murugesh, was even more optimistic when he said that if companies invest more in transformation, analytics and decision support areas, the scope of what can be outsourced will just keep increasing. ?American companies will go back to doing all the right things with their strategic partners like WNS to stave off the economic crisis,? he said.
The Indian information technology industry works for the US economy, Nasscom president Som Mittal added, ?and we bring many solutions to their problems. Indian IT companies are now hiring local citizens.? According to Nasscom statistics, Indian IT firms have created over 2.8 lakh jobs in the US, made an investment of $5 billion and contributed over $15 billion in social security taxes.
Investments from Indian IT firms into the US have only accelerated of late. Infosys is expanding its US operations with a new 125-seater delivery centre in Wisconsin and expects to hire up to 2,000 local employees this year. Software services firm i-Gate has committed to investing $1 million to start a new facility in Loudoun County creating 250 new jobs over the next two to three years. And as FE reported on Monday, Wipro is planning to set up a new entity in US to chase government IT deals, to be manned by US nationals.
(With inputs from Debojyoti Ghosh and PP Thimmaya)