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Commentary
3/2/2009
01:46 PM
Bob Evans
Bob Evans
Commentary
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Fear Of Obama IT Protectionism Policy Spreads In India

In the handful of days since President Obama vowed to punish U.S. "corporations that ship our jobs overseas," the backlash in India against such a disastrous move has spread to officials from government, IT industry associations, and leading Indian IT services companies such as Infosys and Wipro. And while they say they want to wait for more details, they are also clearly deeply concerned about the huge

In the handful of days since President Obama vowed to punish U.S. "corporations that ship our jobs overseas," the backlash in India against such a disastrous move has spread to officials from government, IT industry associations, and leading Indian IT services companies such as Infosys and Wipro. And while they say they want to wait for more details, they are also clearly deeply concerned about the huge implications such policy would have.While today's highly interdependent global economy renders Obama's 19th-century notion of "our jobs" meaningless, the bigger issues are the impact such a move would have on the overall Indian economy's ability to continue being a major consumer of U.S.-made products and services, and the likelihood that other countries would react to Obama's protectionist stance with their own equally unproductive and trade-reducing positions. And the volume of concern from India in particular has been growing rapidly, from a handful of articles late last week about how the administration's position on "our jobs" had rattled the Indian IT services industry, to a list of 115 articles this morning from a Google search. Here are some samples:

  • "India has raised the banner of free trade against the growing protectionism in the U.S.," said the opening sentence in a news story in The Times Of India. That story went on to quote India's finance and foreign minister as saying, "We are opposing protectionism, not only here but at every forum."
  • "US President Barack Obama's statements on curbing tax breaks for outsourcing companies in the US set alarm bells ringing in the Indian IT sector," wrote IndianExpress.com. Nasscom president Som Mittal, noting that American companies generate 50% of their revenue outside the U.S., said, "To be globally competitive, they also depend on globally shared services."
  • A statement from Infosys said, "We are confident that the US will not take any measure which might hurt its global competitiveness." That same article said, "Wipro executive director and chief financial officer Suresh Senapaty said policies of protectionism would only hinder the revival of the world economy."
  • "This is not the time for protectionism but for global collaboration, if the world is to come out of this economic downturn quickly. We hope that all other countries would support this and continue to be proponents of free trade," said a statement from Indian IT trade association Nasscom. "Global outsourcing has helped (US) companies gain the vital competitive edge -- time to market, transformation of businesses, integration of processes, reduce costs and enhance efficiency -- all of which are key drivers for revival of economic activity."
  • "Some companies would try to strike a balance between off-shoring and doing the work domestically as a result of this," said Mr. Vinu. S. Kartha of offshore advisory firm Tholons Inc.
  • India is a tremendously important global partner for the United States, and not only with regard to IT services. It's the largest democracy in the world and our two countries have developed an extensive and impressive record in welcoming each other's citizens and enriching each others efforts in entrepreneurship, academia, global defense, and culture. As such, the administration's proposed protectionist plans, while sounding comforting to a limited slice of the U.S. labor force, would be a damaging blow to a country on which we've come to depend very heavily.

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