While India has been and is one of the top few outsourcing destinations, the recent comments from the U.S. President, Barack Obama on outsourcing has left many Indian offshore companies blink in uncertainty. Obama’s new proposals to terminate tax breaks for American companies that ship jobs to offshore countries like India, has evoked mixed responses.
However, the Indian outsourcing industry is unfazed by Obama’s anti-outsourcing stand and sees it more as a protectionist and retrograde measure that will adversely affect the U.S. companies, rather than the Indian companies. Despite Obama’s anti-outsourcing policy, the $60-billion Indian IT and outsourcing industry is still slated to remain a top outsourcing destination due to its rich pool of English-proficient and tech-savvy professionals whose wages are way below their western counterparts. U.S. companies are likely to continue outsourcing jobs to India as doing so will save them a lot more money.
In hindsight, Obama’s ‘protectionism’ actually works against America’s policy of advocating free trade and globalization. The irony of Obama’s policies is that if the existing tax breaks are suspended, it could lead to an increase in outsourcing as a measure to reduce operating costs, in order to offset the cost hike created by elimination of the tax breaks! Low cost is not the only reason why companies in the U.S. outsource to India; they also benefit in terms of scalability, talent and turnaround time.
The anti-outsourcing plea might also force companies in the U.S. to relocate overseas or merge with an Indian multinational or shift their headquarters to India. All in all, it seems that Obama’s anti-outsourcing plea will not have diverse effects on the India outsourcing industry!