Outsourcing is Irreversible

by Manu Sharma    May 06, 2009

US President Barack Obama’s announcement to end tax incentives for companies that shift jobs overseas will not help create jobs in the US and needs lot more clarity. Outsourcing is not a "reversible phenomenon", said Chandramouli, director-advisory services, Zinnov Management Consulting

"The unprecedented growth of the outsourcing industry is catalyzed by many macro-level factors such as tax breaks and H1B Visas. We have to understand that it is just not these factors on which the industry stands tall today," Chandramouli said. 

Recently, Obama promised to crack down on companies "that ship jobs overseas" and duck US taxes with offshore havens.

Today, outsourcing in India has become a part of nearly every organization’s strategy, and it has helped companies become truly ‘global’ and expand their businesses (topline) beyond American boundaries, Chandramouli said.

"Besides, we should not forget that there are around 1.1 billion people in India alone today, which is a huge consumer market for all products/services to come in next 2-3 decades. The proposed tax revision in tax breaks is counter-intuitive to most organizations who are looking at India very strategically for long-term growth," said Chandramouli.

In addition, such measures will not only restrict innovation, but also hamper the progress of globalization. Additionally, Chandramouli said, the consequences of such a policy spanning across different countries and verticals is unimaginable.

"It is a complex issue and implications can be much larger than the current recessionary scenario that we are dealing with. It is also important for the law-makers to build scenarios around these implications and also analyze the economic and political risk that we may run into," said Chandramouli.

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