How will Obama's new Tax Proposals affect the Indian IT Industry and the Face of Global Outsourcing Industry?

Hi Deepesh,

Earlier when MNCs were approaching India, Indians were worried that the word GLOBALISATION will hit the local markets really hard. Now when Indians have learned to utilise the word GLOBALISATION, Mr Obama is changing the rules of the game.

You can also go through this knowledge item in this platform:

Say no to Bangalore, yes to New York: Obama ; How will it affect Indian IT

Yes I m completely agree with you Deepesh that Obamination is al;ready affected IT industry
The fact is that the industry is already decelerating has perhaps added to the fears in major IT centers such as Bangalore. The Indian IT software and business process outsourcing industry earns about $60 billion, of which about $47 billion is exported. The industry directly employs about 2.2 million people.

Presenting his case for a change in the tax code in his recession-hit country, Mr. Obama said at present the regime levied a lower tax on a company investing in a Bangalore subsidiary than if it invested in Buffalo, New York

I dont think so, but it is a possibility that american industry will be more or less take a hit.First of all if we look at the bulk of Indians working in a BPO,it will be almost impossible for American MNC's to generate such huge bulk of skilled Americans.Indians are more committed to their work than americans and as they are paid in rupees which is significantly weaker as compared to US$,they are practically throwing their change at us.So even if Obama goes for a tax exemption for Outsourcing in US,i dont think it would be a big deal for MNC's as they would still earn more profits as compared to that in US.

Protectionism seems to be one area that Obama has gotten it all wrong. If you really extend Obama's argument, then by that token Indians too would reject American goods and services in order to support the 'local' economy and 'local' products. Imagine what that would do to the MNCs.

US companies outsourcing work actually helps create more value for those firms and shareholders. Remember, if the cost benefit analysis does not work out, American companies would rather NOT expand at all, rather than doing it unprofitably out of some notion of patriotism by creating expensive local jobs in Buffalo. ...