It is now clear that US president Mr. Barack Obama is all set to target the outsourcing industry specially software outsourcing and his recent comments on tax break policy are a clear indication towards it. But economists in India, which has a large share in the offshore IT industry, feel that Obama is not being fair with his comments and have clearly stated that the 50 billion dollars outsourcing to India industry is not dependent on USA for its existence and growth.

Obama passed the comments regarding the US outsourcing sector while addressing a rally in the state of Ohio which a day before has banned outsourcing including software outsourcing, through an executive order from the governor. Though the election poll of November is nearing he stood firm and said that the benefit of tax breaks should actually pass on to organizations which create jobs in America and not to those organizations which create jobs overseas.

Though Obama did not hint at India in his comments, they have surely raised immense concern among all Indians related to the outsourcing to India industry irrespective of whether they are related to software outsourcing, accounting, legal or medical outsourcing. Why shouldn’t they be concerned? After all it is the biggest industry in India and millions of people depend on it for their jobs, career and future. If the industry sees even a small change like the recent hike in H1B visa fees it is affected by millions of dollars. Just imagine what havoc the recent Tax break policy can play on the sector.

Many people feel that with such comments, US president Barack Obama is gathering grievances against himself and the nation as a whole from Indians, just before his planned visit to India in November. Though we are still not sure how people will react to this but there are chances of some harsh reactions coming into light. Yes, there is no doubt that the Indian IT industry to a large extent owes its success and growth to the outsourced jobs from USA but then if we think of the same from a different prospective then it would be clear that USA is not outsourcing its core jobs but jobs which have very few takers over there.

In fact USA is outsourcing drudgery jobs to India like sales jobs, accounting jobs, medical transcription jobs, software writing jobs, documentation or data entry. All these jobs are considered to be sub standard by the US citizens and have very less takers, and if there are takers they ask for a much high salary. No doubt that the outsourcing companies are benefitting by outsourcing to India but just imagine the situation where India refuses to take such jobs, who will do them?

Also by accepting these jobs India is giving a golden opportunity to these companies, they can now concentrate even better on their core business activities. The money they save by outsourcing to India can actually be used in research and development to ensure that the company is able to provide something better each time.

If we take an example of software development it would be not wrong to say USA is far ahead than other nations of the world. They have developed outstanding software development products. We Indians simply use those products to develop a business solution but the actual American brain behind the development of that particular software platform is more important.

Source:http://www.lonad.com/2010/09/15/outsourcing-to-india-impact-of-obama%E2%80%99s-recent-comment-on-tax-breaks/

Amid indications that outsourcing could become a hot issue in the November polls, President Barack Obama has made his stand on the issue clear, saying that tax breaks should go to companies that create jobs in the US and not overseas.

Obama comments came close on the heels of the Ohio state Governor passing an executive order to ban outsourcing, a development that has raised concerns in India that is often described as the world’s back office.

Significantly, Obama’s policy speech on economy came in Ohio itself, where he made clear his determination to end tax loopholes that provide incentives for investment in overseas jobs, saying he will provide a generous tax credit to companies that create more jobs in the US.

“One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries,” Obama said at Cleveland.

The president said he was determined to change that. “I want to change that. Instead of tax loopholes that incentivise investment in overseas jobs, I’m proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America,” he said, with Ohio Governor Ted Strickland standing by his side.

With election due in November for 37 of the 100 seats in the United States Senate, and the opinion polls painting a grim picture for the Democrats, Obama sought to project the tax issue as a key policy difference between his party and the Republicans.

“I think if we’re going to give tax breaks to companies, they should go to companies that create jobs in America not those that create jobs overseas. That’s one difference between the Republican vision and the Democratic vision. And that’s what this election is all about,” Obama said.

Running behind in opinion polls, Strickland of Democratic party, who till now was going out of his way to woo Indian companies, last week passed an executive order that banned outsourcing, arguing that this undermines economic development and has unacceptable business consequences.

“Outsourcing jobs does not reflect Ohio values,” Strickland said in a statement after he signed the executive order. Reacting to the order, the Indian IT sector, which gets 60 per cent of its export revenue from the US, termed the move as discriminatory and said it amounts to a trade barrier.

Source:http://profit.ndtv.com/news/show/no-tax-incentives-to-companies-that-outsource-obama-97106