US IT Majors Feel Obama’s Anti-Outsourcing Policy May Affect World Trade
HIS anti-outsourcing views may have helped Barack Obama strike a chord with middle class Americans during his presidential campaign. But he is having a tough time selling his policies among some of the largest US corporations.
The IT companies such as IBM, HP and Sun Microsystems that run large outsourcing operations in India feel that the policies of the Obama administration aimed at generating more American jobs will not affect their operations here. Top executives of these firms, currently touring India, say the anti-outsourcing policy could be detrimental to world trade. Software maker Microsoft has already aired its opposition to Obama administration’s curb on H-1B visas that provide jobs to non-US professionals in the US.
Indian subsidiaries of IBM, Sun, Microsoft, Oracle and HP combined employ over 150,000 people. IBM, which has more than 70,000 employees in India, sees no merit in US government’s protectionist policies. “We manufacture products and deliver services from virtually every country in the world. We are present in more than 170 countries. IBM goes wherever the talent and the market is,” said Edward Orange, IBM’s director – Lotus Business Unit, software group, Asia-Pacific.
Obama’s decision in February to offer a tax shield of $5,000 per employee per year to companies that keep jobs in the US had invited criticism from several quarters, especially from the $60 billion Indian IT-ITeS industry that depends on the US market for 65% of its revenues.
The local sourcing push by the US administration is unlikely to be effective in a globalised world, said Marius Haas, senior vice-president, HP ProCurve.
“We have labs spread across Bangalore, Costa Rica and Europe. It’s a competitive economy and you go where the talent is. The local sourcing policy on hardware is unlikely to work as 80% of the world now sources manufacturing from countries like Taiwan and China,” he said. HP ProCurve competes with Cisco in networking products such as switches and routers. It has R&D labs in India.
Analysts also do not see such policies making a big impact. “Companies won’t give up offshoring strategy because of this,’’ said Suvojoy Sengupta, partner of a consultancy firm Booz & Co.
Sun Microsystems, a large IT firm, says the US administration’s move could affect the competitiveness of the industry. “The policy may shrink global trade in the long run. Not every job can be outsourced. But a job has to be done at the right place and at the right time. Outsourcing is like a bag of trail mix of nuts and dry fruits, which are sourced from all over the world.