OBAMA AGAINST OUTSOURCING JOBS IN INDIA

US President Barack Obama on Thursday once again targeted outsourcing of jobs overseas by American companies, increasing the pressure on local firms in an attempt to secure some benefit ahead of the crucial November elections in his country.

“One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries,” Obama said,.

New Delhi: The government on Thursday indicated that the US administration’s move against outsourcing may be contested in the World Trade Organization (WTO), stating New Delhi will take up the issue with Washington.

“We have to ensure what they (US) are doing is WTO compatible when we are talking about trade, movement of goods, movement of people and movement of services,” commerce and industry minister Kamal Nath said here.

In his first address to the joint session of the US Congress on Wednesday, Obama stated his administration would end tax breaks for corporations that ship the US jobs overseas.

Nath said, “One has to see how the US companies using India as a base for technological development respond to their own government.”

Outsourcing of technology development by large companies cannot be switched on and off, he added.

About 1,000 American firms, which have moved their jobs abroad, are expected to be affected by the proposed Obama move against outsourcing.

Among the major US companies, which have shipped jobs to other countries like India include General Electric, Microsoft, Hewlett-Packard, Motorola, Pepsico and Proctor & Gamble.

FICCI appreciates that overcoming the challenge of growing unemployment is tough but we feel that protectionism is certainly not the answer. This is setting the wrong precedence and giving the false impression that offshoring causes loss of jobs. What is not understood is the fact that offshoring work actually improves the competitiveness of the U.S. economy, its companies and government departments.

In a statement, ASSOCHAM President Dr. Swati Piramal said that states that have resorted to outsourcing of IT related services benefited the most out of it and banning offshoring of IT projects will adversely affect the economy of the country concerned.

Offshoring creates job opportunities not only for destinations countries but also to countries which outsource such services and therefore OHIO should re-consider its decision.