New Delhi: India’s $50 billion (Rs 2.3 trillion) software services industry, which has been buffeted by rising protectionist sentiment in the US, expects US President Barack Obama’s visit to India and the outcome of US mid-term elections to reduce the pitch of the anti-outsourcing rhetoric.
Obama went back with $10 billion of Indian business deals that he said would create 50,000 jobs in the US. His visit to India this month followed the mid-term elections in which the Republicans seized control of the House of Representatives.
The positive statements made during the Obama visit helped reduce some of the negativity on the issue of outsourcing, said Vineet Nayyar, vice-chairman and CEO of HCL Technologies Ltd, on the sidelines of the World Economic Forum’s India Economic Summit on Monday.
“We expect it to be business as usual and there will be less of extreme measures taken,” he said.
Nayyar, who was on a visit to the US during the Obama visit, reasoned that a part of this will be driven by the fact that Republicans have taken a majority in the House of Representatives. “This will help build a consensus on issues,” he said.
One key piece of legislation still worrying the industry is the Comprehensive Immigration Bill, which proposes to put a 50% cap on foreigners hired by companies in the US.
Subhash Dhar, a member of the executive council and senior vice-president at Infosys Technologies Ltd, agreed that the anti-outsourcing rhetoric will abate a bit “till the next elections”.
Dhar, however, added that tighter visa norms and the recent hike in visa fees are driving companies to do more work outside the US.
“Though we continue to hire in the US, there is more work being moved offshore,” he said.
In August, Obama signed a controversial Bill that would increase border security, largely financed by higher fees for visas extended to foreign workers, after it got the approval of the US Congress. The move largely impacted Indian IT companies.
As the rhetoric against outsourcing abates, clients are easing up on the issue, Nayar said. “Over the past few quarters, we had just stopped announcing big outsourcing deals to prevent any backlash,” he said. “This should change now.”
Suresh Vaswani, joint CEO of Wipro Ltd’s information technology business and a member of the board, said it was too early to say whether protectionist sentiments have eased, but “we hope that they do, post the recent developments”.
Companies have to change their business models in order to find a permanent solution to the issue, said Ravi Pandit, chairman and group chief executive of KPIT Cummins Infosystems Ltd.