We have been hearing many news from USA since Barack Obama has taken the oath as President. However, the news that mattered most to the Indians is the news "Yes to Buffalo.. No to Bangalore"..
Let us understand what does it mean and how it is going to impact the Indian IT industry..
1. Earlier, the American companies (e.g. IBM, Intel etc) used to get a lot of tax incentives by opening offices at off-shore (e.g. Bangalore). So, a lot of American companies were encouraged to open offices at off-shore.
2. However, president Obama has put an end to these kind of tax benefits to the American companies those have offices at off-shore. Instead, the companies having offices in USA, will enjoy the tax incentive now. This means, the companies that are creating jobs in USA will get tax incentives.
3. Hence, this is a big set back for the American companies those have offices at off-shore.
4. There should not be much impact on the Indian companies (e.g Infosys, Wipro, TCS etc) as the Indian companies were not getting any tax benefit from USA.
5. Since the American companies are now discouraged to open offices at off-shore, it means more work will be out sourced to Indian IT companies. Because American companies will not make much profit by doing that work in USA (though they'll get tax incentive). Also the availability of skilled loborors will be a challenge for the American companies.
6. So, we may observe some job losses from American companies at off-shore. However, at the same time we can expect more work being out sourced to the Indian companies.
PS: The Obama administration has restricted the hiring of H-1B visa-holders by companies bailed out by the Federal government. The restriction on deployment of trained people at client locations could require the Indian companies to seek local talent. In such a case, the local resources may only be available at higher wages. This news is little bit disturbing from Indian IT company point of view.
Thanks,
Srimaya Rath
Let us understand what does it mean and how it is going to impact the Indian IT industry..
1. Earlier, the American companies (e.g. IBM, Intel etc) used to get a lot of tax incentives by opening offices at off-shore (e.g. Bangalore). So, a lot of American companies were encouraged to open offices at off-shore.
2. However, president Obama has put an end to these kind of tax benefits to the American companies those have offices at off-shore. Instead, the companies having offices in USA, will enjoy the tax incentive now. This means, the companies that are creating jobs in USA will get tax incentives.
3. Hence, this is a big set back for the American companies those have offices at off-shore.
4. There should not be much impact on the Indian companies (e.g Infosys, Wipro, TCS etc) as the Indian companies were not getting any tax benefit from USA.
5. Since the American companies are now discouraged to open offices at off-shore, it means more work will be out sourced to Indian IT companies. Because American companies will not make much profit by doing that work in USA (though they'll get tax incentive). Also the availability of skilled loborors will be a challenge for the American companies.
6. So, we may observe some job losses from American companies at off-shore. However, at the same time we can expect more work being out sourced to the Indian companies.
PS: The Obama administration has restricted the hiring of H-1B visa-holders by companies bailed out by the Federal government. The restriction on deployment of trained people at client locations could require the Indian companies to seek local talent. In such a case, the local resources may only be available at higher wages. This news is little bit disturbing from Indian IT company point of view.
Thanks,
Srimaya Rath
Comments
And if that is the case,then I feel its a matter of days when new laws might be catapulted to stop this even...
Just have to wait and watch whether people say OH MAA..OH MAA or Hail Obama...
But it's true that without outsourcing no can survive. Because there are lots of support work which requires 24*7 support whether it's a bank or ITsector.
And further a business man will alwyz look for a profit not for charity..
Let's hope that it doesn't impact Indian economy.