Obama visit mildly positive

Written by Rachana Khanzode | Updated: Nov 15 2010, 06:47am hrs
While the US President Barack Obama was in India last week to bring about change for the US economy, he left with no concrete message to address the concerns of the Indian IT services industry.

We want access to your markets he said and was here in India to create stronger bi-lateral trade relations. However, in his approach to create more jobs in the US through innovation and collaboration with India on account of defence and nuclear energy, Obama missed out to bring any concrete outcome on issues relating to the Indian IT services and outsourcing industry. In fact, outsourcing was just not a part of the US Presidents agenda and senior executives from the industry were not expecting much.

So though Obama did talk about doing away with protectionist measures, he didnt had much to put forth on the US border security bill that he recently signed and its related concerns. Nasscoms global trade development, vice-president, Ameet Nivsarkar, said, We are still waiting for an official communication from the government as both the Indian Prime Minister and the US President have had communication on key issues put forward by us. These were largely on cyber security, towards trade and against protectionism. Besides we did also put forward our view to sign Totalisation Treaty between the two countries that would exempt social security tax in both the countries. It is estimated that the Indian citizens largely from the IT industry that go the US pay about $1 billion annually as social security tax to the US government.

Infosys Technologies board of director and head of human resources (HR), Mohandas Pai, defined the outcome of Obamas visit as mildly positive for the Indian IT industry.

The best part that Obamas visit has done is clarifying that the Indian outsourcing industry has not stolen the US jobs but created tremendous opportunity for the US firms. We are happy to see that the Indian government has put forward a very strong statement to the US in communicating our stand.

Ganesh Natarajan, vice-chairman and MD of Zensar Technologies, said, Outsourcing was not a part of his agenda and we are expecting the two governments to take appropriate steps for the industry. The Indian government has put forward a strong view and we expect it to result in a positive way for the industry.

It may be recalled that last year in a bid to bring back the reeling US economy on track, Obama had put forward protectionist statements like Say no to Bangalore and yes to Buffalo, New York.

Also at the beginning of the year, Obama hinted on doing away with local tax breaks for corporations that create jobs overseas.

More recently during discussions on a $600 million border security bill that had already created a kerfuffle among Indian IT companies because it is largely underwritten by a 200% hike in visa fees in categories such as H1B and L-1, New York Senator Charles Schumer gave a disparaging remark about Bangalore-based Infosys as chop shops.

The Indian tech industry has been facing a number of issues besides the hike in visa fees. In a recent conversation, a senior HR executives from one of the top IT services firm, said that they were witnessing increasing number of visa rejections as the US economy tighten ups immigration. While another set of industry executives feel the big difference that the Obama visit is expected to bring is the absence of any political statements impacting the image of the Indian IT and outsourcing industry.

At the same time Obama has continued to play a big role in marketing products by large corporations like GE and Boeing to India and bring high technology developed by similar such companies in India.

Considering, the US currently has a job loss rate of an average of about 9%, the worlds largest economy definitely cannot survive on its domestic market.

It is important for the US to export its technology now. The US has been in isolation in tech sharing due to its restrictive approach. However, sharing of its high technology in defence and nuclear energy is going to push the technology market of the US globally, Indranil Deb, principal, Mobius Strip Capital Advisors said.

The India visit was an important move for Obama as job creation has been an important agenda before the elections due in November for 37 of the 100 seats in the United States Senate. Also, Obama has projected tax issue as a key policy difference between his party and the Republicans.