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Obama’s win: What it means for Indian markets and economy

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Obama’s Anti-outsourcing Policy

Barack Obama’s anti-outsourcing ads have helped him in being re-elected as US President. Over the past few months the US president has released waves of advertisements against his Republican rival, Mitt Romney. These have claimed “Romney outsourced call center jobs to India” and was a “pioneer in outsourcing”. President Barack Obama has said that he wants to give tax breaks to companies that are investing in the United States, but will this spell out bad news for our economy and jobs market?

In his second term U.S. President Barack Obama, is likely to continue the approach he’s taken to India thus far, sticking to his opposition to outsourcing jobs to India. Many of Obama’s proposals centered on changes to the tax code, including limiting deductions for companies that move jobs overseas, rewarding companies that return jobs to the United States and increasing taxes on wealthy Americans. However, experts say this wouldn’t affect India’s IT BPO industry.

Will Obama’s win Hit the Indian Economy hard

India, often referred to as the back office has become a major outsourcing hub for most global services, given the cheap labor and skilled workforce. A Nasscom report says that over 400 of the Fortune 500 companies now have operations in India. “So, even if the new Obama legislation ends their overseas tax break, they will still find India competitive, even if somewhat less profitable, says noted economic columnist Swaminathan S. Anklesaria Aiyar.

IT experts have said Obama’s tax break policy would not apply or affect the IT BPO industry in India. But there will be some significant issues for the countries to sort out, such as India’s immigration concerns and US worries about investment barriers. India’s tech companies have faced challenges with the Obama tenure in getting visas for their workers. Indian firms have complained about rising visa fees (since the enactment of a 2010 law) and delays in getting applications processed.

The US President, last year, had also been very vocal about curbing medical tourism to India, with a plan to change the US healthcare system. “My preference would be that you don’t have to travel to Mexico or India for cheap healthcare,” he said in response to a question about why US health insurance won’t cover medical expenses incurred abroad. “I’d like you to be able to get it right here in the United States of America that’s high quality.” US patients obtain health care treatment in foreign countries well below US rates. Treatments include dental implants, hip and knee replacements or bariatric surgeries. Americans also go abroad for more complicated procedures such as heart operations and cancer treatment, or alternative therapies such as stem cell treatment unavailable at home. Obama proposed a $634 billion health care bill in June (often referred to as Obama care). But critics view the law merely as an insurance reform that would do little to slow the rising costs of pharmaceuticals or medical devices and result in curbing medical tourism to India.

Obama does, however, see India as a potential market and even urged India to open up its economy to foreign direct investment. “As we look to India today, the United States sees an opportunity to sell our exports in one of the fastest-growing markets in the world.” For America, this is a jobs strategy. India’s economic transformation has been a boon for American companies and workers. In less than a decade, U.S. exports have quadrupled to $19 billion.


Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

One Response so far | Have Your Say!

  1. Oliver Hall

    This is due to of your large share of highly skilled sources. Also, they’re increasing together with continued access to the most up-to-date technology.