Democrats win, but BPOs ain't cheering
7 Nov, 2008, 0147 hrs IST, N Shivapriya,ET Bureau

MUMBAI: The Democrat win in the US elections could at worse mean fewer H1-B visas for the Indian IT industry and at best, a faster recovery for the US economy from the current crisis. Indian firms are hoping it will be the latter.

Outsourcing, which has been an issue in the previous US election campaigns, has not been such a big theme this year as the US grapples with the financial crisis. There is also tacit acceptance that outsourcing can no longer be wished away or controlled.

Indian IT firms are hoping that the Democrat majority in Senate and the House of Representatives will help push through an overhaul of the financial and healthcare systems in the US that will speed up a recovery and also give more business to Indian outsourcing industry.

“The significant restructuring of the financial and healthcare systems can widen and deepen the relationship with corporate America and with the government,” said Nasscom chairman Ganesh Natarajan.

There have been murmurs of a tax structure intended to discourage outsourcing, which Obama spoke about during the campaign. US-India lobby groups and IT companies say that it would not be feasible to levy any tax on outsourcing companies.

“What may happen is that tax breaks available for certain companies may be reduced or taken away,” said Robinder Sachdev, president, The Imagindia Institute, a lobby group for India.

What has also taken the limelight away and reduced the anti-outsourcing rhetoric this time, is the focus on the North American Free Trade Agreement (NAFTA). This was one of the key issues on which Hillary-Obama battle was fought in Ohio as manufacturing jobs moved from Ohio to Mexico.

“NAFTA became the poster-child of job losses, and in a sense, outsourcing got a reprieve. NAFTA came to be seen as a bigger evil,” Mr Sachdev added.

Industry observers and experts feel the focus will be on how to keep jobs in America and could include incentives for those creating jobs. Many expect the H1-B visa limit will also be decreased. “In the past, Obama has voted in favour of reducing the limit for H1-B visas,” said B Ramaswamy, president and MD, Sonata Software. “But overall, I think the Obama win is good news, if he puts the economy back on track,” he added.