US anti-outsourcing to hit Indian IT: Experts

Updated on: Tuesday, September 14, 2010

Increasing anti-outsourcing opinions in US, evident by Ohio State's ban on outsourcing IT services to foreign lands, is likely to adversely impact the $51-billion Indian IT industry, feel analysts.

Ohio Governor Ted Strickland of Democratic Party recently banned outsourcing saying this undermines economic development and has unacceptable business consequences for his state.

Last week, US President Barak Obama too raised the outsourcing bogey, stressing that he would end "tax breaks" for companies that "create jobs and profits in other countries."

The move comes ahead of the US President Barack Obama's visit to India in November and follows a controversial legislation that increased H-1B and L1 visa fees, hitting India's over $50-billion IT industry.

Indian IT majors like Infosys Technologies, Wipro, HCL Technologies and TCS get 60 per cent of their export revenue from the US.

Ashika Brokers Research Head Paras Bothra told, "The move may dampen the Indian IT companies in a long-run, amid fears that other US states may too follow the suit in order to create local jobs".

Nasscom had said, "Ohio state's proposed ban on outsourcing of government IT projects comes at a time when the November elections to the United State Congress and Ohio governorship are drawing nearer."

But some analysts feel that this move is a political gimmick and will not have much impact on the Indian IT companies.

"More than the IT companies, MNC's like IBM and Accenture are more exposed to the fears of a ban. It's a political gimmick and moreover a temporary sentiment," Angel Broking Research analyst Srishti Anand said.

US anti-outsourcing to hit Indian IT: Experts

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