Anti-BPO bill fails, Indian IT cos relieved

The Indian information technology industry is relieved at the US Senate's decision to block the proposed 'Creating American Jobs and Ending Offshoring Act', that sought to offer a tax holiday for employers moving jobs to the US from abroad.

"It (sought to) encourage people to remove foreign workers and create jobs in the US and tax those companies that have subsidiaries overseas.

It would have affected the manufacturing industry and has been condemned by the US Chambers of Commerce.

Though we knew it will not be passed, this blocking has conveyed the message that regressive bills create unnecessary hype about protectionism," said Som Mittal, president, National Association of Software and Services Companies, the apex body representing the Indian IT industry.

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Girish Paranjpe, joint chief executive officer, IT business and member of the board, Wipro, said, "While we have mentioned before that this bill is not something that was going to affect us directly, we are encouraged by the current sentiments of the US law makers, that seem to encourage globalisation.

"This move is especially good for our customers, as it helps them drive efficiencies in the global markets. For economies and businesses to continue to grow, countries globally must resist protectionist practices."

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However, with elections in the US, Nasscom is wary of more election rhetoric that may come.

"This Bill was not to impact us much and no such other legislation has come to place after the Border Security Law but these things can impact the electorate," Mittal added.

The industry's fears are justified in the light of the Border Security legislation the Obama administration cleared last month, which nearly doubles the H-1B and L-1 visa application fee from the present level of about $2,300 to about $4,300 per application.

While this would not much impact the industry's revenues, Mittal had said, the costs would certainly go up.

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The $50-billion Indian IT exports' industry derives 60 per cent of its revenues from the US.

"The bill may not have impacted India-based outsourcing companies, as it would have impacted those that were contracting with the US government and those that have data centres in India," said an official from the Nasdaq-listed business process outsourcing company, EXL Service.

"The US' recovery is based on global trade and if it becomes protectionist, then it will be a problem for them, as they will be closing the doors to markets of growing countries," added Mittal.