Obama's anti-outsourcing rhetoric puts IT industry in wait-and-watch mode

Moumita Bakshi Chatterjee
K. Bharat Kumar

New Delhi/Chennai, Aug. 29 Stung by the apparent anti-outsourcing overtone of Senator Barack Obama's acceptance speech where the Democrats' Presidential nominee pledged to halt tax sops to companies that ship jobs outside the US, the Indian IT industry on Friday said that globalisation of services was "irreversible" and argued that outsourcing had enabled US firms to stay competitive. (Not in the United States).  The lack of employment has had huge effects of the US economy.

While industry captains reacted with caution trying to decipher the underlying implications, some sought to play down the reference to outsourcing terming it as an "election rhetoric."

"Most of the tech companies have large number of open jobs today that are not being filled due to lack of technical resources. Moreover, US companies have realised that outsourcing improves competitiveness….US companies have to decide what is the most effective model to do business," Nasscom President, Mr Som Mittal, told Business Line.

He pointed out that the problems were more glaring in manufacturing sector than in IT. "The US is actually trying to ramp up its science, technology, engineering and math (STEM) capabilities and so I do not think the Senator was referring to IT industry in particular," he added.

Senator Obama, in his address to the Democratic National Convention in Denver, had said that unlike his Republican rival Mr John McCain, he would stop giving tax breaks to corporations that ship jobs overseas, and will start giving them to companies that create good jobs in America.

When contacted, Mr Phaneesh Murthy, CEO, iGate Corporation, quipped, "I don't know of a single company that gets tax breaks for sending jobs overseas."

Mr Shailesh Shah, Chief Strategy Officer, Satyam Computer Services, pointed out that it was difficult to attempt to stem the flow of jobs or act on tax cuts, as it would require Congressional and Senate approval.

The Senator's comments assume significance as India's software and services exports stood at about $40 billion during the financial year 2008, a growth of 29 per cent, with US as its largest market.