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Indian outsourcing industry jittery after Obama win

But some say with election over, president-elect will see that outsourcing has cost benefits for U.S. companies.

By John Ribeiro
November 5, 2008 12:00 PM ET

IDG News Service - BANGALORE, India -- India's outsourcing industry is privately a little jittery after Sen. Barack Obama's victory in the U.S. presidential election. But there is the expectation in industry circles that in the end, economic pragmatism will prevail.

Obama, in his speech accepting the Democratic Party's presidential nomination, said he would stop giving tax breaks to companies that ship jobs overseas and would start giving them to companies that create jobs in the U.S.

That could spell trouble for India's outsourcers, which get most of their revenue from the U.S.

There are fears that in the current protectionist mood, U.S. companies, already battling an economic crisis, will cut costs by reducing discretionary work sent offshore to countries like India, according to an analyst who declined to be quoted.

Congratulating Obama on his victory, the National Association of Software and Service Companies (Nasscom) said today that it supports expanding the H-1B visa program to allow more skilled workers from abroad. As it helps meet skills shortages in the U.S., the H-1B visa program can help U.S. companies lead the way on innovation and contribute additional jobs and economic growth in the country, a Nasscom spokeswoman said.

The H-1B visa program has previously come in for criticism from some U.S. senators who said it was being used to displace qualified U.S. workers with foreign employees. But many technology companies in the U.S. say the program provides skilled workers that they can't find easily in the U.S.

The uncertainty in India about the impact of Obama's presidency on Indian outsourcing was also reflected in comments by P. Chidambaram, the country's finance minister, referring to Obama's comments on outsourcing. "A comment here or a comment there should not bother us," Chidambaram told reporters today. "Once Obama is in office, he will realize that it is an interconnected world, and countries have to work together."

Some analysts hold that the fears may be exaggerated because an U.S. economic recovery will depend largely on cutting costs, which offshore outsourcing offers.

Obama's comments about bringing jobs to the U.S. were primarily in the context of manufacturing jobs, according to research firm Gartner Inc. "In a specialized field like IT, it is not just a matter of 'choosing' to outsource overseas or not, but the issue of skills availability locally," said Partha Iyengar, a vice president at Gartner.

There is usually a lot of rhetoric in the run-up to an election, said Siddharth Pai, a partner at outsourcing consultancy firm Technology Partners International Inc. Before pushing through any protectionist legislation, any president will have to seriously consider that outsourcing and offshoring offer direct cost benefits to U.S. companies and will keep the country competitive, he added.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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