Global outsourcing benefited US firms: Nasscom

BANGALORE - Indian IT industry body Nasscom has reacted cautiously to US President Barack Obama’s remarks on outsourcing, saying global outsourcing had benefited US firms that generate over 50 percent of their business overseas.

‘American companies generate more than 50 percent of their business outside the US. Their workforce is global. To be globally competitive, they also depend on globally shared services,’ Nasscom president Som Mittal told IANS on phone from the US.

Welcoming Obama’s observations on protectionism, Mittal said late Wednesday that the US president’s statement would have a positive effect on his country’s economy that is going through a recession after a long time.

‘Obama has, in fact, supported the need to avoid protectionism. We have to see how he would prevent job losses without resorting to protectionist measures,’ Mittal pointed out.

Citing the latest US state department data on employment, Mittal said job losses in construction, retail and manufacturing were more than in services, especially in the IT space.

‘Compared to other sectors, job losses in the US tech sector were 2.2 percent as against the overall unemployment rate of 7.2 percent. The US administration will not do anything that would harm its industry or economy, which is driven by the technology leadership its companies enjoy,’ Mittal noted.

Asked what impact Obama’s statement on outsourcing would have on the Indian IT and BPO (business process outsourcing) industry, which has been reeling under global recession and financial meltdown in the US, Mittal said he had not seen any specific proposal to the contrary.

‘We have not seen any specific proposals to the contrary. The people here (in the US) are more concerned about healthcare, energy, saving jobs and economic recovery than outsourcing, on which Obama used only nine words,’ said Mittal.

Admitting that the economic downturn had created turmoil worldwide impacting businesses and job creation, Mittal said global sourcing had helped (US) companies gain the vital competitive edge - time-to-market, transformation of businesses, integration of processes, reduce costs and enhance efficiency, which were key drivers for economic revival, worldwide.

In his first address to the joint session of the US Congress in Washington Tuesday, Obama said there would be no tax breaks to US companies that outsource their jobs abroad.

Earlier, in a statement from New Delhi, Nasscom said it was heartening to note that Obama had supported the need to ‘avoid protectionism’ in his speech.

‘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,’ Nasscom said.

Countries the world over have been promoting local investment through tax incentives for job creation while supporting international trade.

Quoting reports by leading analysts, Nasscom said job losses in the tech sector was the lowest in the US, as compared to unemployment in the manufacturing, retail and construction sectors.

‘The technology sector is a part of the global value chain and while affected by the downturn, is still expected to grow,’ Nasscom added.