Jun 01
American president Barack Obama wants to end tax breaks that he thinks lead US companies to shift jobs to developing countries like India. Indian analysts fear this will hit foreign investment and jobs in India. These fears are overblown. Indeed, the tax changes may unwittingly facilitate the takeover of US firms by Indian ones, showing [...] [...more]
Posted: under Outsourcing, Software outsourcing.
Tags: Barack Obama, BPO
American president Barack Obama wants to end tax breaks that he thinks lead US companies to shift jobs to developing countries like India. Indian analysts fear this will hit foreign investment and jobs in India. These fears are overblown. Indeed, the tax changes may unwittingly facilitate the takeover of US firms by Indian ones, showing once again that protectionism ultimately hits the protectionist.
The US imposes corporate tax on the global income of its companies, not just their US earnings. US companies have long protested that this made them uncompetitive in low-tax countries. To reduce this disadvantage, the US made profits earned abroad tax-free, until repatriated to the US. This tax break helped US companies establish large operations (and shift jobs) abroad. Obviously, the tax break was not the only consideration, but made outsourcing more attractive.
They came initially for cheap labour. But soon they found that India had a greater comparative advantage in skilled than unskilled labour. Indian companies like Infosys, TCS and Wipro proved they were world class in computer software and business process outsourcing (BPO). Other companies showed that highly skilled services could be outsourced to India too – credit ratings, radiological reports, and legal services. And India’s scientific skills encouraged many multinationals to outsource R&D too. Others came to access India’s own market for goods.
Source: Times of India
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May 09
India Inc believes the move by the Barack Obama administration to reduce tax breaks for US firms that ship jobs overseas will hit American companies more than impact on the Indian outsourcing industry.
“It’s a more US-US issue rather than one aimed at stopping outsourcing, or off-shoring, or anything to do with India,” said Som Mittal, [...] [...more]
Posted: under Outsourcing.
Tags: Barack Obama, India Inc, NASSCOM, Outsourcing
India Inc believes the move by the Barack Obama administration to reduce tax breaks for US firms that ship jobs overseas will hit American companies more than impact on the Indian outsourcing industry.
“It’s a more US-US issue rather than one aimed at stopping outsourcing, or off-shoring, or anything to do with India,” said Som Mittal, president of the Nasscom, a representative body for the industry.
“If you look at Indian companies operating in the US, or elsewhere, they work there and pay taxes there. Hence, it is not about stopping outsourcing, or off-shoring, but just to collect taxes,” Mittal told IANS.
His comments came after President Barack Obama said Monday that the current US tax system gave US-based multinationals that shipped jobs to places like India an unfair advantage over other domestic rivals and wanted corrective steps.
“It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York,” Obama said, explaining why he intended to close tax loopholes and crackdown on overseas tax havens.
“I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens.”
According to a McKinsey-Nasscom study, the Indian software and outsourcing industry employs some two million people, earning total revenues worth $52 billion, of which nearly $48 billion comes from exports.
The Confederation of Indian Industry also felt that the remarks were more in the nature of posturing and that it was not intended at curbing outsourcing of work by US firms to Indian companies.
“It’s an internal issue. It will only reduce their competitiveness,” said Hari Bhartia, vice president of the chamber. “It is a populist posture. Perhaps Obama’s intention was not the same. However, it sends a wrong message.”
Read complete article at Inditop
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Feb 28
US companies benefited more than 50% by outsourcing their business overseas. [...more]
Posted: under Outsourcing.
Tags: Barack Obama, construction, Manufacturing, NASSCOM, Retail
Indian IT industry body NASSCOM has reacted cautiously to US President Barack Obama’s remarks on outsourcing, saying ‘global outsourcing had benefited US companies that generate over 50% of their business overseas’.
NASSCOM president Som Mittal also told ‘American companies generate more than 50 percent of their business outside the US. Their workforce is global. To be globally competitive, they also depend on globally shared services, Obama has, in fact, supported the need to avoid protectionism. We have to see how he would prevent job losses without resorting to protectionist measures’
Citing the latest US state department data on employment, Mittal said job losses in construction, retail and manufacturing were more than in services, especially in the IT space.
He also said ‘Compared to other sectors, job losses in the US tech sector were 2.2 percent as against the overall unemployment rate of 7.2 percent. The US administration will not do anything that would harm its industry or economy, which is driven by the technology leadership its companies enjoy,’
Complete article can be found at Taragana
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