US President Obama’s remark,
…to restore a basic sense of fairness to the tax code, eliminating incentives for companies that ship jobs overseas.
Aditionally, new H-1B visa restrictions require financial services firms getting money under TARP to comply with new rules.
What does the Indian industry think? Industry is concerned on the direction in which the whole issue is moving. (1) Industry believes that outsourcing has made US more competitive and has created more jobs in the US economy; offshore value proposition remains strong. (2) NASSCOM has chosen to dwell on the fact that the focus is to turnaround the US economy, which is a positive for Indian IT.
There has been no impact on the Indian IT industry till date due to increasing protectionism – details of the latest Obama comment are not yet out. However, increased rhetoric does highlight that it is becoming a sensitive issue and we fear that politics could prevail over economics in the short term – increasing the pressures on Indian IT in an already tough environment.
INR depreciation has hlped the Indian IT companies for now, assuming they have not hedged aggressively.