What does Obama have in store for IT industry?

[OhioChick]

14 Nov 2008, 2242 hrs IST, Vanisha Joseph, TNN

The Indian IT business is watching every move of his. Speculation, hope and delight tinged with annoyance - it is a potpourri of emo-tions in the Indian cities that are IT hubs
IT fraternity if you talk about him. None doubt his strength but fear falling on the wrong side of the fence. Barack Obama, the US president-elect, has IT companies following US politics in full attendance. Why so? Because if he sticks to his promise of ending tax breaks for companies that ship US jobs, the Indian IT sector’s revenue might flunk the profit test.

“Most of the outsourcing happens to India as labour is cheap here. Obama’s comment against outsourcing is a point of worry as jobs of IT professionals are at stake,” said Karan, an employee of e2e People Practices. Dileep, a Bangalore-based IT professional, said: “His acceptance speech at Chicago clearly reflects his anti-outsourcing ideas. The example of the man in Indiana who had to pack up the equipment that he worked on for 20 years and watch it being shipped off to China shows he views outsourcing as a problem. But the current economic scenario could make him mellow down as cutting cost is crucial to recover from the crisis.”

Krishna Kumar, manager (HR), Rangsons Electronics, says: “Obama wants jobs in the US to increase but that shouldn’t be at the expense of the outsourcing industry. Indian labour is cheaper and better. Why should Obama focus on areas where there is not much of value addition for the US?”

Obama’s comments on outsourcing haven’t gone down well with the software pros who hope this sore talk was just part of the dramatic election campaign that will ease once he enters the White House. “His remarks against outsourcing were nothing more than his political campaign to garner support by the traditional democratic image. In today’s turbulent times where everyone wants to reduce overhead costs, outsourcing becomes all the more important,” said Kunal Mehta of Collabera, with 90% of its business from US.

Raghav K, an IT R&D analyst, feels the cost advantage US companies have in India is so high that it will absorb the taxes. “In India, the cost per person would be $50-60 K compared to the $110-130 K in the US. The taxes won’t hurt us,” he said. Further, Indian businesses have diversified across Europe, Asia and Africa which will play in their favour.

Apart from the fear of revenue dip and job cuts, the IT industry is getting goose bumps over H1B visa and trade policies. Obama has questioned the need for more H1B visas and last year voted to reduce the number of visas issued to foreign workers. “H1B restrictions result in increased outsourcing of jobs. The more US creates barriers to professionals entering in, the work and revenue will flow out. India’s outsourcing industry has resulted from the US barring professionals who deliver work from India to reach US shores,” said Sanjay Kamlani, Co-CEO, Pangea3.

Yeshasvini Ramaswamy, director, e2e People Practices, feels more restrictions would be tough with the powerful American corporates. “Such a situation rose during Bush’s tenure. Bill Gates opposed it, threatening to shift base to India. The IT giants are in favour of Indian companies. Hence, it might not have an adverse affect when it comes to restricting H1B visa,” she said.

More: http://economictimes.indiatimes.com/Infotech/What_does_Obama_have_in_store_for_IT_industry/articleshow/3714762.cms

[Idealism]

1. Boo F!#$ing Hoo

So what if IT hubs in India close if the jobs are coming back home, they were our jobs to begin with. This country needs a return to 'the land of opportunity' instead of the land of outsourcing employment

[Azlady]

6. Boy Halo experiment - perfect!

Thank you for your post, "the land of opportunity, instead of the land of outsourcing employment". We need our jobs State side with us working those jobs. GOD I am so excited that I might actually be able to work in the field that I went to college for and love!

Thanks again,
Azlady

[thunder rising]

2. "Indian labour is cheaper and better" only is the sick minds of an Indian outsourcer

I have personally fired way too many incompetent "on-shores" for that phrase to be true.

[nini]

3. exactly

it's never worth the upfront savings in the long run.


Bring those jobs home.

[OhioChick]

13. From what I've seen/experienced...

It ends up costing more in the long run.

[ChromeFoundry]

4. I hear over and over...

how innovative the people of India are. I don't see any form of innovation in take a job from another country and doing it cheaper because the cost of living is lower. The statement by Krishna Kumar, "Indian labour is cheaper and better," has to raise some eyebrows. Never before has there been such an influx of complaints steaming from all sectors of outsourced IT work.

If the United States forcefully takes these jobs back, how is that any different that the original transfer of job ownership to India? If I have no right to complain about someone taking my job offshore... they have no right to complain when I am able to take it back. That is the new definition of 'Innovation', right?

[The Backlash Cometh]

9. I can't figure out how they can make better games.

I mean, American youth spend their entire adolescence with these things.

[sledgehammer]

12. How can we bring back the jobs?

I don't see innovation at all in the whole outsourcing situation. It's really been a simple business decision - cheaper (but rarely better and faster).

I totally agree with you on taking the jobs back. Other countries didn't complain when they got the jobs - it was good business for them then. Well, if the situation is reversed then as they say, one person's pain is another person's gain.

But how to bring the jobs back is something I spend a lot of time discussing with friends and colleagues. While closing the offshore tax break loophole (as proposed by Obama) is one step, I'm not sure it's enough to make a difference. It might even end up creating fully independent companies offshore, that then have a "strategic" partnership with the American parent.

Taxing outsourced jobs is difficult to do as it is hard to pinpoint jobs & products when there is a global development team in place.

I think the Obama plan of job creation is probably the best bet (non-outsourceable jobs e.g. energy, tax breaks for new job creation, etc.), but it doesn't necessarily bring back the jobs that have already gone overseas.

Your thoughts?

[ChromeFoundry]

15. It's easy to bring jobs back...

Pressure the local medias into informing the masses on where the jobs are going, and get them as pisses off as they should be.
Get a substantial amount of people to voice their disgust in the companies outsourcing practices.
Stop buying their products and services.

You will have a press release issued within the week that they are bringing the jobs back. The most important thing for a company is to keep a healthy Brand. When that starts goes sour, companies panic.

[sledgehammer]

18. That's definitely a start...

...and could be more effective than some of the laws in place. But will it work? Well before IT outsourcing, product manufacturing was shipped overseas. The negative effects of this have been known for decades and the media has covered it. Yet, manufacturing jobs have not really come back and the drain continues. Consumer efforts to buy American products/services have never really gained any serious traction.

In the end, companies just say (read lie) that outsourcing is a great benefit to the consumers in the end, and that usually saves them from taking action.

I actually thought Lou Dobbs made a good start on that many years back in informing the public about the outsourcers (but then he went a bit over the top and I have no idea what he's talking about nowadays).

Maybe if one state started taking serious action...tax breaks/penalties at the state level, and showed some positive results, that would be a good sign for other states to follow that model.

[ChromeFoundry]

19. The only way this would work...

is to have a substantial number of people actually take action against this type of practice. I still don't see enough people up in arms over Walmart's business practices. I believe, as the economy tanks further, that will bring about awareness. Hopefully, then it will not be too late to spur the recovery of lost jobs. What we really need is our leaders to become vocal over these issue... that is the quickest way to the mainstream media and open up dialog.

Think about it... how fast did the Diebold brand get destroyed with the news on voting irregularities? Now, place company names and their brands in line with... "they don't want you working for them.. they just want you money for their cheap products that used to be made here." That usually doesn't sit too well with people.

The key is to educate the people on how outsourcing affects them, individually. Without that, you don't get much traction.

[sledgehammer]

20. Agreed 100%

With economy/jobs being the number one priority for all Americans, our representatives in DC better be listening. House members have 2 year terms, we better make them know that.

Hopefully some sort of legislation to protect jobs will come up, and let's publicize the names of those congressmen/women who oppose such legislation.

And more media highlighting of lost jobs, reeling economy, and weakened consumer power should help too.

Someone on another related thread talked about how outsourcing is a loop that will bite the corps in the butt (lost jobs in the US = loss of consumers for their products). That will be the eventual result, but action is needed now.

[mitchleary]

5. Better my ass, that is why everything is designed here and made supported there

I do not know how much crap i have seen fixed after Indians have done the work. Not to mention the language barrier is sometimes huge. I am one wh would like to see this outsourcing crap to pad the pockets of management reversed.

[Skittles]

7. I hope they fucking worry

they'll know how WE feel

[ihavenobias]

8. K & R

[Triana]

10. Indian labor is cheaper. But BETTER? I think not.

It's cheaper. Period. I've seen time and time again where a US employee or contractor has to go behind and clean up messes left by that "better" Indian labor. Hard lessons learned by the company who wanted that cheap labor and realized they got what they paid for. Pfft!

[geezy2269]

11. Thank God

Please please please follow through Obama. I really couldn't care less what happens to their IT industry overseas. This should teach them to invest in THEIR OWN COUNTRY, and BUILD THEIR OWN FREAKING ECONOMY AND INFRASTRUCTURE. I'm also sick of having to recode entire applications done by 21 year old kids they send over here, straight out of college. Why the hell does the concept of "you get what you pay for" not understood by the average CTO/CIO? A lot of my friends and family are hurting because of this (i'm an American born Indian fwiw, so no racial bias here.) Let's get our jobs back...

[OhioChick]

14. A quick welcome..

:hi:

[undeterred]

16. " Indian labour is cheaper and better."

Time and experience have proved this to be untrue.

[acmavm]

17. Did anyone else bristle at the Twilight Zone remark hidden in paragraph

3??

<snip>

The example of the man in Indiana who had to pack up the equipment that he worked on for 20 years and watch it being shipped off to China shows he views outsourcing as a problem.

<snip>

Wow, I would probably guess that there was an American with that same feeling of desperation long before this guy.