Indian IT Professionals Upset with Obama

Bangalore: Indian IT professionals Tuesday slammed President Barack Obama's move to end tax incentives for US companies that ship jobs to countries like India, saying it will neither benefit the U.S. nor its corporate sector."Obama's latest move was expected, but unwelcome at a time when Bangalore's IT and BPO sectors are already reeling under the global economic meltdown," said Padma Nair, 26, an IT-professional working for a Bangalore-based American company.

"Obama's new policy is not going to benefit anyone, neither the outsourcing companies nor the country the job is outsourced to. The cost saved in outsourcing is higher than that saved by tax exemption," Nair told IANS.Expressing a similar view, Shankar Banerjee, 25, a quality analyst working for another American IT company, said if Obama's proposal is pushed through, it will hit business coming India's way and many Indians would lose their jobs."IT and BPO companies in India have already suffered due to the slowdown. A lot of people have lost jobs. Obama's latest move will cause more problems," added Banerjee.

The comments came after President Obama said Monday that the current US tax system gave US-based multinationals that shipped jobs to places like India an unfair advantage over other domestic rivals and wanted corrective steps."It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York," Obama said, explaining why he intended to close tax loopholes and crackdown on overseas tax havens."I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens."

According to the National Association of Software and Services Companies (Nasscom), the US accounts for about 60 percent of India's software services export revenue. Bangalore-based firms account for one-third of this.A recent study by the association, conducted along with McKinsey, shows the Indian software and outsourcing industry employs some two million people, earning total revenues worth $52 billion, of which nearly $48 billion comes from exports.

American IT companies that have set up offices in Bangalore include Accenture, Microsoft, Amazon, AOL, Cisco, Dell, IBM and Intel.An estimated 600,000 people are employed in Bangalore's software and outsourcing sectors. And industry professionals say many could lose their jobs following Obama's latest move.

UNITES-Professionals India, a trade union for IT enabled services sector, predicts 50,000 employees in India will be handed the pink slip over the next few months. Bangalore, hailed as India's Silicon Valley, could be the worst affected.Concurred Sumana Prasad, 32, an IT employee working for an Indian company: "The slowdown has already hit Bangalore's IT and BPO companies. Obama's latest step will affect more people."

Anti India Bill Introduced in the US

WASHINGTON: A legislation has been introduced in the US Senate on reforming the H-1B and L1 visa programmes, popular among Indians, under which th e American firms looking for skilled foreign professionals are required to make a "good faith" attempt to recruit local workers first.
Given that the skilled professionals from India are the one who account for the maximum number of H-1B and L1 visas, Indian professionals followed by those from China are likely to be hit the most if the legislation introduced by Senators Chuck Grassley and Dick Durbin is passed by the Congress and then signed into law by the President.

The bill, introduced yesterday, requires all employers who want to hire an H-1B guest worker to first make a good faith attempt to recruit a qualified American worker. Employers would be prohibited from using H-1B visa holders to displace qualified American workers.

"Our bill will put a stop to the outsourcing of American jobs and discrimination against American workers," Senator Durbin said in a statement. "The H-1B visa programme should complement the US workforce, not replace it," he argued.

The bill prohibits the practice of 'H-1B only' ads and prevents employers from hiring additional H-1B and L-1 guest workers if over 50 per cent of their employees are H-1B and L-1 visa holders, Grassley said in a statement. It gives power to the Department of Labour to investigate, audit and penalise abuse of H-1B and L1 visa employers.

However, Grassley argued the bill does not eliminate the programme or change the numerical cap of visas available to petitioning employers. "The H-1B programme was never meant to replace qualified American workers. It was meant to complement them because of a shortage of workers in specialised fields. In tough economic times like we're seeing, it's even more important that we do everything possible to see that Americans are given every consideration when applying for jobs," he said.

If there are not qualified Americans, companies can use the legal immigration programmes available, "but we must return the H-1B and L visa programmes back to their original intent," Grassley said.

"Congress created the H-1B visa programme so an employer could hire a foreign guest worker when a qualified American worker could not be found. H owever, the H-1B visa programme is plagued with fraud and abuse and is now a vehicle for outsourcing that deprives qualified American workers of their jobs," Durbin said.

He claimed that the H-1B visa programme is currently being used by some companies to outsource American jobs to foreign countries. "Under current law, an outsourcing company can use American workers to train H-1B guest-workers, fire American workers and outsource the H-1B workers to a foreign country where they will do the same job for a much lower wage. In fact, Indian Commerce Minister Kamal Nath has referred to the H-1B as 'the outsourcing visa," he said.

It was Grassley and Durbin who were mainly instrumental in the Congressional legislation early this year which stopped hiring of foreign workers by US companies receiving the federal stimulus money. As a result of this, coupled with the general economic recession, the filing of H-1B visas has dropped quite significantly.

In the first three weeks after they started receiving applications, US authorities received about 44,000 H-1B visa petitions against the Congressional mandated quota of 65,000. In previous years, they had been receiving H-1B petitions several times the number of Congressional mandated quota.

In October last year, they had released a Benefit Fraud and Compliance Assessment that highlighted rampant fraud in the H-1B programme. The report revealed more than a 20 per cent violation rate by those who use the H-1B visa programme.

"When Citizenship and Immigration Services report that there is more than a 20 per cent violation rate in the H-1B visa programme, it's pretty clear that many companies are abusing the programme and not using it as was intended. Fraud and abuse of the H-1B visa programme will not be tolerated and our bill puts companies on notice," Grassley said.

"Our legislation to reform the programme will benefit American workers, while still ensuring that US companies get the highly specialised workers they need."

Grassley alleged that fraud and abuse had become all too prevalent in the H-1B programme and thus there was need to close loopholes and enact reform.

UN calls for a new global currency

A United Nations panel of economists has proposed a new global currency reserve that would take over the US dollar-based system used for decades by international banks.

The proposal comes on the heels of the controversial call by China's central bank governor, Zhou Xiaochuan, to create a new world currency reserve to replace the US dollar as part of a sweeping overhaul of global finance, which is suffering its worst crisis since the Great Depression of the 1930s.

China and many developing countries blame the crisis on US mishandling of overextended mortgage loans and investments in them.

"A new global reserve system... with regular or cyclically adjusted emissions calibrated to the size of reserve accumulations, could contribute to global stability, economic strength and global equity," the panel said in a document released in New York.

The call was issued at the end of a three-day conference at UN headquarters in New York on Friday.

Earlier this week, the US said it was open to enlarging the International Monetary Fund's (IMF) currency reserves, but insisted the dollar would remain "the world's dominant reserve currency".

The call comes just days before the world's 20 largest economies (G20) were to meet in London to chart a way out of the global recession.

The UN panel said a new global reserve would be "feasible, non- inflationary and could be easily implemented". It said it would help lessen the difficulties now caused by unbalanced adjustments between surplus and deficit countries.

The 22-member panel is headed by Nobel Economics Prize laureate Joseph Stiglitz, a frequent critic of past US fiscal policy.

"The nature of this crisis has opened up opportunities for change that I think would not have been conceivable even a few months ago," Stiglitz said on Thursday.

The panel made several recommendations to deal with the financial crisis, which it said requires the cooperation of rich and poor nations together to take strong and effective actions to stimulate their economies.

Stiglitz said there has been a growing consensus among UN members that the US dollar-based financial system is problematic. But he warned that the idea of a new global reserve is still a concept that panelists are debating.

He said the current system was "relatively volatile, deflationary, unstable and (had) inequity associated with it".

"Developing countries are lending the United States trillions dollars at almost zero interest rates when they have huge needs themselves," Stiglitz said. "It's indicative of the nature of the problem. It's a net transfer, in a sense, to the US, a form of foreign aid."

The panel, known as the Commission of Experts on Reform of International Finance and Economic Structures, was established by the UN General Assembly last year to deal with the widening economic and financial crisis.

The panel believes the creation of a new global reserve would help poor countries through an improved credit system, built on a system of special drawing rights (SDRs) set up by the International Monetary Fund after World War II.

China's call for a replacement of the US dollar has made the UN proposal for a new currency reserve stronger. Some panelists suggested the SDRs could be used as a new standard of a global reserve currency.

China Calls for a New Global Currency to Replace Dollar

China calls for new global currency
BEIJING (AP) — China is calling for a new global currency controlled by the International Monetary Fund, stepping up pressure ahead of a London summit of global leaders for changes to a financial system dominated by the U.S. dollar and Western governments.

The comments, in an essay by the Chinese central bank governor released late Monday, reflect Beijing's growing assertiveness in economic affairs. China is expected to press for developing countries to have a bigger say in finance when leaders of the Group of 20 major economies meet April 2 in London to discuss the global crisis.

Gov. Zhou Xiaochuan's essay did not mention the dollar by name but said the crisis showed the dangers of relying on one nation's currency for international payments. In an unusual step, the essay was published in both Chinese and English, making clear it was meant for an international audience.

"The crisis called again for creative reform of the existing international monetary system towards an international reserve currency," Zhou wrote.

A reserve currency is the unit in which a government holds its reserves. But Zhou said the proposed new currency also should be used for trade, investment, pricing commodities and corporate bookkeeping.

Beijing has long been uneasy about relying on the dollar for the bulk of its trade and to store foreign reserves. Premier Wen Jiabao publicly appealed to Washington this month to avoid any steps in response to the crisis that might erode the value of the dollar and Beijing's estimated $1 trillion holdings in Treasuries and other U.S. government debt.

The currency should be based on shares in the IMF held by its 185 member nations, known as special drawing rights, or SDRs, the essay said. The Washington-based IMF advises governments on economic policy and lends money to help with balance-of-payments problems.
Some economists have suggested creating a new reserve currency to reduce reliance on the dollar but acknowledge it would face major obstacles. It would require acceptance from nations that have long used the dollar and hold huge stockpiles of the U.S. currency.

"There has been for decades talk about creating an international reserve currency and it has never really progressed," said Michael Pettis, a finance professor at Peking University's Guanghua School of Management.

Managing such a currency would require balancing the contradictory needs of countries with high and low growth or with trade surpluses or deficits, Pettis said. He said the 16 European nations that use the euro have faced "huge difficulties" in managing monetary policy even though their economies are similar.

"It's hard for me to imagine how it's going to be easier for the world to have a common currency for trade," he said.

China has pressed for changes to give developing countries more influence in the IMF, the World Bank and other finance bodies. G20 finance officials issued a statement at their last meeting calling for such changes but gave no details of how that might happen.

Russia also has called for such reforms and says it will press its case at the London summit.
Zhou said the new currency would let governments manage their economies more efficiently because its value would not be influenced by any one nation's need to regulate its own finance and trade.

"A super-sovereign reserve currency managed by a global institution could be used to both create and control global liquidity," Zhou wrote. "This will significantly reduce the risks of a future crisis and enhance crisis management capability."

Zhou also called for changing how SDRs are valued. Currently, they are based on the value of four currencies — the dollar, euro, yen and British pound.

"The basket of currencies forming the basis for SDR valuation should be expanded to include currencies of all major economies," Zhou wrote. "The allocation of the SDR can be shifted from a purely calculation-based system to one backed by real assets, such as a reserve pool, to further boost market confidence in its value."

Eye Witness Account of A Layoff ! Interesting Read!

* This is an eye-witnessed layoff, as reported by a victim*
victim - May i come in? i am sorry, i am late. But that should be fine.

HR - Please come in. Are you aware why we have arranged this meeting?
victim - yes of course. Even one of my friend attended the same in morning. First i thought it is because he downloaded a porn video yesterday, but the very next moment, i realized what is this all about.

HR - have a seat please. See, it's a part of the organization process that we periodically need to re-align the number of resources with the requirements and re-size the number of available skills according to demand. So maybe you do not exactly fit in the current work profile and that's why we want to give you an opportunity to look for a more suitable place. And that is why, we are executing this layoff procedure.

victim - so you mean to say that 200 candidates who had undergone oh-so-hyped technical and stress interviews in their campuses and then recruited by you, who were turned into coding machines over last two years do not fit in for work ? and it took two years for you to realize that ?

HR - See, it doesn't work the way you think. you might have been put on layoff list because you are an under performer.

victim - ahaan. so now you think i am under performer. There are people on bench over 10 months because their resource manager haven't assigned them to projects and you think employees are under performer ? project directors, who have been stuffing resources with bloody 200% margin and even then, 10% of the team always has to perform under extreme stress and you are saying employees are under performer !!! we are not under performer, we never had an opportunity to perform.

HR - see, project assignments and such authorities are not in HR's hands. HRs are for your compensation issues, and we are always helpful to employees for such matters.

victim - Oh yes, of course. you have always been helpful to all managers & directors in hiding the numbers when there's an extra bonus deposited from client's side so that those employees; who are actually working their asses off to deliver the project even before the deadline; would never know why their share has disappeared ! i will tell you why exactly this layoff is being executed. It's not because the reasons you stated.

It is because American big brothers are not ready to outsource anymore work to India. and typically, not to our company. We are doing the same work since years and years with no difference in quality, but with an increased cost every year.

So they are not ready to buy your junk code written by those dumb fashion chicks you have retained to make your office look more glamorous.

Managers are more focused on internal politics about how do i climb the organization ladder and not let the others. They are not letting technically strong engineers being exposed to clients because they are feeling insecure when they stand next to their juniors.

Neither the company has brought any innovation in it's service and that's why, we are much much less efficient than expected. you want to pay more to those who sit inside the closed cabin and that's why you are firing those employees who are sitting outside !

HR - listen, you need to calm down. you are not the only person. There are lot others on the list.

victim - oh ya. the long list ! something that the company is really proud of. whatever. i am pretty calm and cool. don't worry, i wont need any of those ambulances you have kept ready outside. In fact, i am very happy that this ended very soon and you yourself are firing me.

Otherwise, i was about to resign in coming time. Just let me know where all i need to sign and finish it off.

HR - Alright, here are the papers you need to sign. Once you complete that, surrender your Identity card and Access card. After that, you are not allowed to walk inside the official premises or interact with any employee. so one security guard will escort you to the parking. let me know the address, our cab will drop you home. if you have any personal belongings in your cubicle, do let us know. We will send them out separately along with your relieving letter.

victim - okie. I will need a cab to pearl's bar. We all, who are being fired are having a party there, and no offense, but you are not invited
Source:
http://spectatorspeaks.blogspot.com/2008/08/layoff-in-indian-it-industry.html

Obama Cuts Cost to Face India, China

Washington: President Barack Obama wants to reduce health care and energy costs to lessen the massive national debt lest India and China overtake a recession hit US economy."We're doing everything we can to reduce that deficit," Obama said addressing his second prime time news conference Tuesday night.

A fiscal deficit of over $1.3 trillion left by the Bush administration is expected to double with the stimulus measures to rescue the economy.

But it's hard to do so "because we've accumulated a structural deficit that's going to take a long time, and we're not going to be able to do it next year or the year after or three years from now. What we have to do is bend the curve on these deficit projections," Obama said."And the best way for us to do that is to reduce health care costs," he said suggesting investment in health information technologies and preventive care. "Let's do a whole host of things, some of which cost money on the front end, but offer the prospect of reducing costs on the back end."

Now, the alternative is to stand pat and to simply say: We are just going to not invest in health care. We're not going to take on energy. We'll wait until the next time that gas gets to $4 a gallon. We will not improve our schools."And we'll allow China or India or other countries to lap our young people in terms of their performance. We will settle on lower growth rates, and we will continue to contract, both as an economy and our ability to provide a better life for our kids,"

Obama said.Asked about a Chinese proposal to replace the US dollar as the reserve currency with a new global currency run with a different standard by the International Monetary Fund, he said: "I don't believe that there's a need for a global currency.""The dollar is extraordinarily strong right now," Obama said, "and the reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world."

Obama First TownHall Meeting

President Barack Obama held his first online town hall meeting on Thursday with Americans across the country posing questions to him over the Internet.

The session focused on people's concerns about jobs, the economy, health care and education. During his presidential campaign, Barack Obama used the Internet to build an unprecedented grassroots movement of volunteers and to raise record sums of money.

Now he is using the World Wide Web to interact one-one-one with the American people from the East Room of the White House."When I was running for president, I promised to open up the White House to the American people," said President Obama. "

And this event, which is being streamed live over the Internet, marks an important step towards achieving that goal."

More than 92,000 Americans submitted questions to the president online, some of them in video form. Online visitors could also see the questions submitted by others and vote for the ones they liked best.

Some 3.5 million votes were cast for favorite questions on a variety of topics, including unemployment, the federal budget, the country's financial stability, home ownership, health care and education. T

he first video question came from a woman in the southern state of Georgia:"When can we expect the jobs that have been outsourced to other countries to come back and be made available to the unemployed workers here in the United States," she asked.

The president told her that not all of these jobs will return, especially low-skilled, low-paying jobs.But Mr. Obama said his recovery plans aim to create new jobs that cannot be outsourced."

So we've got to go after the high-skilled, high-wage jobs of the future," he said.

Some groups mobilized their members to use the question and answer session creatively to raise their own issues, as President Obama explained."

I have to say that there was one question that was voted on that ranked fairly high and that was whether legalizing marijuana would improve the economy and job creation," he said. "I don't know what this says about the online audience."The president then answered that he did not think legalizing marijuana would help the economy.

The many votes cast for this question show that the White House might have been successful in reaching out to a younger audience with the virtual town hall meeting - involving people who might not watch a more formal, televised news conference.

US Could Kill Indian Outsourcing

Mumbai: George F Baker professor of economics at Harvard University, Martin Stuart Feldstein, 70, has been heading the US National Bureau of Economic Research for 25 years. Feldstein has also advised US presidents on the economy, his latest role being a member of Barack Obama’s economic recovery advisory board.
The economist was in Mumbai and spoke with Mint on a variety of issues, including the latest bailout plan of the US treasury, his worries and how planned curbs on Wall Street could impact outsourcing.

On the latest US bailout plan.

Raising concern: Martin Feldstein. Ashesh Shah / MintIt’s an ingenious plan. There are a lot of positives to be said about it. It’s goal is ambitious—take a large part of impaired assets away from banks; keep them in private hands rather than under government management; avoid nationalizing the banks, protect taxpayers in the sense that they will have some potential positive gains if things work out well (with the plan).

On his worries about the plan

One issue is: Is it enough? A trillion dollars is a lot of money even in the US. By contrast, banks have more than $10 trillion balance sheets and they have residential mortgages of $3 trillion. They have mortgage-backed securities on top of that and commercial mortgages of $2 trillion...And if this new treasury plan—the private-public partnership—doesn’t take away most of the impaired assets, then what exactly does it accomplish? It will still not put the banks in a position where...they can lend.

There’s also a question of whether the banks will actually sell the mortgages. When you are a bank looking at several hundred millions of mortgages, would you want to write them down and sell them 50 cents to the dollar?

On excess liquidity leading to inflation.

Most of the money pumped in is going directly to the Federal Reserve. The Fed’s balance sheet expands; the reserves expand; and the bank’s balance sheets expand. But they are not lending this money, they are depositing this at the Fed. And the Fed pays interest on those deposits.
I think there is a potential for inflation. It is not this year’s worry, but I think it is something that could come along. If there is $2 trillion or more excess reserves in the banks, they will have every reason to want to use those reserves to make loans. That would push up demand and could be inflationary.

Beyond what they want, the Fed can normally go into open market operations. But it doesn’t have $1 trillion or $2 trillion of assets with which to conduct open market operations. All they got is junk—for lack of a better name. And it is not clear, when the time comes, they will be able to persuade the banks to take the junk back.

On the possibility of Asia’s export-led growth model collapsing as US consumers start saving.

It won’t collapse. I think it will be less when the dollar comes down, as I think it will, and there will be more demand from the US consumers for US-made goods and services.
On outsourcing.

Well, I read in the Wall Street Journal today that IBM is laying off people in the US and expanding in India. The US companies are under financial pressure; it becomes a question of more incentives. When you need to save money, those things (a call centre or accounting back office in India or China) look attractive.

On curbs on the financial sector in the US and its impact on outsourcing in India.

It’s scary. It’s a frightening thought. What I don’t know is whether they will actually try to
enforce that and if they do, there will be indirect ways of going around it. Because of the British tradition, the English language and the quality of secondary education, India has an ability to be competitive in outsourcing.
Could we kill it unintentionally or intentionally? Yes, the US could and that is a real danger.

Stricter Rules for H1B

The restrictions on hiring skilled foreign workers on H-1B visas included in the stimulus package have kicked in. The US Citizenship and Immigration Service on Friday announced additional requirements for employers who have received bailout funds from the Treasury Department or emergency loans from the Federal Reserve.

Indians receive the largest share of H-1B visas, meant for specialty occupations. The first category of companies includes banks that have received assistance under the Troubled Asset Relief Programme and the second automakers General Motors and Chrysler.

The stated objective of the Employ American Workers Act, signed into law by President Barack Obama as part of the American Recovery and Reinvestment Act on Feb. 17, is to ensure that bailed-out companies do not displace U.S. workers.

Under this law, if such a company seeks to hire new H-1B workers, it is considered an “H-1B dependent employer.” H-1B dependent employers must make additional attestations to the Labour Department. Many people have argued that this virtually bars hiring of foreign workers.

Even before the notification was issued, Bank of America withdrew appointment letters it had issued to about 50 foreign students set to graduate from U.S. business schools. In fact, the issue has affected the rollout of something called the Term Asset-Backed Securities Loan Facility, or TALF.

The $1-trillion programme aims to jump-start consumer and business lending. Hedge funds, insurers and other companies considering joining the plan are worried about hurdles to bringing in foreign talent, Bloomberg reported. USCIS clarified that the new law does not apply to H-1B petitions seeking to change the status of a person already working for the employer in another authorised category.

"It also does not apply to H-1B petitions seeking an extension of stay for a current employee with the same employer," the agency said. On April 1, USCIS will start accepting H-1B petitions covered by the Fiscal 2010 cap. The financial year begins October 1.

US senate move on limiting H1B workers may hurt IT firms

The Indian IT industry, which recently lowered its growth projections on the back of a slowing economy, sees no immediate impact of the recent US Senate vote to prohibit banks, that are bailed out, from replacing laid-off workers with foreign guest workers (read H1B workers).

The situation, however, would hurt the fortunes of Indian IT firms if the amendment becomes policy since the top 10 H1B visa list is made up largely of India-based firms that provide outsourcing services, including Infosys Technologies, Wipro and Satyam Computer Services. The deadline for companies to request petitions for new H-1B visas is April 1. Both US (read Silicon Valley) and Indian companies have repeatedly stressed the need to raise the cap, which was reduced from 195,000 to 65,000 two years ago.

However, Senators Sanders and Charles Grassley (a well-known H1B opponent) recently introduced an amendment that would require bailed-out banks -- where there have been layoffs -- to hire only Americans for two years. This was accepted by the US Senate a day after it was revealed that Americans lost almost 600,000 jobs in January. The amendment, though, has to go 'reconciliation' (a legislative process) before going to Congress and finally the President before it becomes policy.

It is feared that these banks (bailed-out with taxpayer money), in a bid to contain or cut costs, would outsource and offshore more work to low-cost countries like India jeopardising the chances of American workers from getting a job. The senate amendment seeks to prevent this, and it could affect the fortunes of the Indian IT industry since outsourcing from the Banking, financial services and insurance (BFSI) sector accounts for almost 40 per cent of the sector's revenue.

"Wall Street caused the crisis, millions of people lost jobs, including 100,000 in financial institutions. Now they want to bring in foreign workers," Senator Bernie Sanders said in a release. It is feared that the bailed-out automakers too would face a similar diktat. This is another lucrative revenue segment for local IT firms.

Software body Nasscom opines that it's up to American banks to choose whether they need to outsource more work to cut costs. "The wording is very confusing. Besides, one may also remember that it is applicable only to H1B dependent companies (an H-1B dependent employer is one whose workers brought in with that visa comprise 15 per cent or more of the employer's total workforce). We hardly have any such IT firms in India," explains Som Mittal, President, Nasscom.

"There won't be any immediate impact but if the issue persists and becomes policy, then the concern could become grave," cautions Ganesh Natarajan, Chairman Nasscom and deputy Chairman and Managing Director of Zensar Technologies.

The H-1B visa issue has always been a bone of contention but the economic recession has added fuel to fire. Vinu B Kartha, Partner at Research and Advisory firm Tholons says: “There can’t be a complete ban on outsourcing because it is a free market economy but the new administration in the US will make it difficult for those companies do business who are outsourcing their work. Companies will get incentives to not to outsource work like tax refunds and other benefits.”

Analysts say it will be difficult for the Indian IT companies to get new projects and they will now have to ensure that none of their existing accounts are under the purview of law. The slowdown will ensure that only the best qualified people get jobs in the US and this is where the Indian workforce will suffer. “Outsourcing will continue but the Indian IT vendors will have to focus on verticals other than BFSI like telecom, manufacturing, healthcare among others,” explains Kartha.

Incidentally, Microsoft which was among the top 10 firms getting approvals for H-1B visas in the year ended September 30, 2007, also was questioned by Senator Grassley when it recently downsized its US workforce. He called on Microsoft to give preference to American workers over visa-holding H-1B foreign workers during its downsizing.

There have also been fears that President Obama, once elected, would revisit the outsourcing and offshoring story that could adversely affect Indian IT firms. However, analysts note that President Obama has filled some of his top White House positions with people like Senator Judd Gregg and Diana Fareell (ex McKinsey Globa Institute) who not only support expanding the H-1B visa programme, but also see offshore outsourcing as postive for the US economy. McKinsey, a management consulting firm, has published research that argues that offshore outsourcing to low-wage countries brings "substantial benefits" to the U.S. Its studies and reports have been cited by the tech industry in support of the H-1B visa programme.

Observers also note that the amendment isn’t as tough as the one Senator Grassley proposed on February 5, which would have prohibited firms from hiring H-1Bs altogether.

Curbs on H1B, Outsourcing

The US government, as part of its stimulus plan to revive the depression in the US economy, recently decided on including an amendment that imposes a ban on firms receiving government bailouts, from hiring workers from other countries. Microsoft has recently been asked to remove foreign workers that are employed under the H-1B Visa program, resulting in the software giant announcing that 5,000 jobs will be cut in the next six months; including 1,400 immediately.
H-1B visas are offered by the US government to enable international students and highly skilled international workers, from all over the world, or who are already living in the USA, the opportunity to live and work in America legally.

From the beginning, there has been criticism from various quarters, over the role of the H-1B program in replacing US workers. There were several instances of US staff being replaced with H-1B workers. The ploy employers used is to hire these H-1B replacements from contract job shops. This way the companies could claim that they had not applied for H-1B visas, making it possible for them to legally replace their US staff.

Another complaint was that US Employers hired H-1B workers because they pay significantly less than they would have to for US workers. This cheap labor causes depression in the overall wage structure.

Currently, 65,000 H-1B visas are granted by the US annually to Hi-technology workers from countries like China, India and Philippines.

The US government states that they are not against the H-1B program, but it has to be used in the actual spirit of why it was started in the first place – to have alternatives for specialized workers when there is no availability in the US. It was also clarified that since the 900 billion dollars for the stimulus plan is being paid by the American taxpayer, it is only fair that American workers are hired.

This decision for foreign countries could mean hundreds of thousands of foreign students studying in the US universities will not get employment and millions will be made jobless.
The US government is also planning on controlling outsourcing. American firms that move their jobs to other countries will not be eligible for any tax breaks. Obama, in his address said, “We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.”

This will affect more than 1,000 American firms that have over the years moved their jobs outside the country. The government is doing away with a particular provision of the tax code where US companies pay lower taxes for profits earned from foreign countries. There has been opposition for this tax code for a long time, as it was seen as an encouragement for companies to send their jobs abroad, when they rightfully belong to the American workers. The government’s aim through this move is to make outsourcing unattractive to companies in the US.

However, many believe that tax breaks when compared to savings through outsourcing do not stand a chance. While the idea of tax breaks would certainly appeal to the US businesses, it would require a huge tax break to change the established trend of global outsourcing. It would be highly unlikely for companies involved in significant outsourcing to take their businesses, and the related infrastructure and human-resource costs back onshore. So, the impact of this move may be very little.

People who oppose this move say that this move will only hurt the US as outsourcing makes a lot of sense; both economic and logical. It is left to be seen what actually happens. However, with Obama focusing on the revival of the US economy, this is the kind of positive reaction that Americans expect from their new President.

Anti Outsourcing : Pharma First Victim

With Barack Obama taking over as the President of the United States, outsourcing of activities from the US to the Indian market might get adversely affected, hitting the pharmaceutical sector the most, a top industry official said.

"President Obama has a conservative stance on outsourcing of services since he wants to create jobs and protect existing ones (in the US). As the Indian pharma industry is sustaining mainly on outsourcing, especially from the US, the future does not appear very smooth," pharma major Promed Group's President Deepak Bahri told PTI.

The Promed group manufactures and delivers branded as well as generic pharmaceutical formulations to Russia, CIS, south-east Asian countries, the UK and EU.

There will be increased competition in the US generics market since the US Food and Drug Administration-approved plants will enable many players to enter into the US market, earlier ruled exclusively by a few big companies, Bahri said.

"Companies that are cost-effective and good in supplies will survive," Bahri said.

With the global economy in a recession, it would make business sense for Indian pharma companies to address the CIS markets.

"CIS nations are taking aggressive steps to address their healthcare sector. Therefore, Indian pharma companies should be ready to grab the opportunities available in these markets," he said.

Though the healthcare system in the CIS countries are in a process of reformation, there are several challenges for the drug manufacturers.

"The shift towards the generic market has opened the gates for a variety of international companies and the market has become fiercely competitive," Bahri added.

Pharma companies have experienced a dip in profit margins on account of the global slowdown, Bahri said, attributing it to competition from China and appreciation of the Rupee against the US dollar.

Indian companies, however, have proved their manufacturing and research and development capabilities and the CIS nations can benefit enormously by establishing tie-ups with Indian pharma companies, he said.

"Today, the markets have evolved with time. In countries like Russia, consumers are ready to pay a higher cost for quality and there are international competitiors who are fighting for a share of these growing markets," he said.

The global meltdown could negatively impact Indian pharma exports but "good relationships with the target audience help to sustain longer in the markets," Bahri said.

Marketing of pharma products calls for a strong field-force network complimented with a robust supply-chain. A growing product portfolio is the key to beat competition and this will ensure a constant flow of income into the business," the Promed chief said.

The Promed Group is an emerging Indian pharmaceutical entity offering pharmaceutical products to global markets and has clocked a growth rate of 119 per cent for the period April-December 2008 as compared to the year-ago, Bahri said.

In the last five years, the company has recorded a Compound Annual Growth Rate of 34.49 per cent, an absolute growth of 340.80 per cent and an average yearly growth of 68.01 per cent.

The group clocked a turnover of Rs 100 crore (Rs 1 billion) in FY 08.

India Inc Worried: Obama Anti Outsourcing

After a decade of outsourcing transform India into much of the world's back office, Indians are worried that President Obama's new Administration—and the slowdown in the global economy—will cast a shadow over one of the fastest-growing sectors of their economy. Obama's $787 billion stimulus plan will make it increasingly difficult for U.S. companies receiving bailout money to hire foreigners on H1B Visas. The budget the President recently presented may also make it harder for U.S. companies that send jobs overseas to receive tax benefits.

In India, where the $63 billion IT sector makes up almost 7% of the national GDP, the moves are worrying government officials. Acting Finance Minister Pranab Mukherjee groused about it over the weekend in an interview with CNN-IBN, a content partnership with Time Warner's ( owned by India's TV18. "We will have to address this issue," said Mukherjee, whose ministry has spent the last five months trying to restart India's slowing economy with tax cuts and spending plans. "We are opposing protectionism, not only here but at every forum."

WHAT'S NEXT?

Even more vexing for India's outsourcing industry is the lack of clarity about what might be coming next from the U.S. During a Feb. 24 speech to Congress, Obama said the Administration will eliminate "incentives for companies that ship jobs overseas," but the White House has not provided additional details. A line item in Obama's budget titled "Implement international enforcement, reform deferral, and other tax reform policies" is the only hint tax experts in the U.S. and in India have had about the policy. The estimates for tax revenues generated by that budget change start at $15 billion in 2009 and go up to $25 billion in 2012. Those inexact estimates, says Rosanne Altshuler, co-director of the Tax Policy Center (a joint venture of two Washington think tanks, the Urban Institute and the Brookings Institution), is an indication that the changes in tax policy have not yet been worked out, and likely will not become public until April.

Indians with a stake in the outsourcing industry are now waiting and watching. "Of course we are concerned," says Mohandas Pai, a board member and director of human resources at Infosys (, India's second-largest IT company by revenues. "But nobody knows what the devil is being referred to [in the Obama statement]."

At a time when nearly 5 million Americans have applied for unemployment benefits and another 1.7 million are working part-time jobs because they can't find full-time work, immigration and outsourcing have become key political issues in the U.S. As he did during his campaign, Obama has made clear during the first weeks of his Presidency that he intends to pursue policy changes to discourage outsourcing and the use of U.S. work visas—especially H-1B visas—that could cost American jobs. At no time has he made the exact policies clear, says Altshuler. Even within the government, the changes remain a mystery. Edward Kleinbard, the chief of staff for Congress' Joint Committee on Taxation, was forced to offer up a guess about the cryptic item in the budget during a meeting with a group of international lawyers last week. "Deferral will certainly be at play," he said, according to a report in Tax Notes, a publication of the Tax Policy Center. He was referring to how corporations are able to defer paying tax on income earned overseas until they bring that money back to the U.S.

That may not do enough to discourage outsourcing, says Andrew Kokes, vice-president for marketing at a Nashville-based outsourcing firm with 4,000 employees in India. Even if the U.S. proposes a punitive tax on companies doing work offshore or offers a tax break for those that do not, the changes wouldn't be large enough to offset the 20% to 30% benefit companies get in lower labor costs when they do certain work offshore, he says. "A tax break can't compete with that kind of arbitrage," says Kokes.

A WORLDWIDE TREND

The U.S. is not alone in this increasing aversion to foreign labor and to outsourcing. As the pain of the global economic crisis intensifies, countries all around the world are adopting policies that make it tougher for foreigners to get jobs. In the Gulf countries, where several million Indians are employed in jobs ranging from construction to banking, governments have cut down on work visas and sent unemployed Indians home by the planeload. A Dubai-based official with an airline (who asked not to be named) says construction companies chartered more than 30 flights in January alone to fly workers back to India. In Malaysia, 43 Indian workers who have overstayed their visas expect to be deported this week, as thousands more leave voluntarily. On Mar. 2, the British government started an inquiry into whether immigrant workers should be restricted to sectors of the economy that have documented worker shortages.

In India, these decisions have raised hackles. India's IT sector is seen as a source of national pride—an area where Indians see themselves as competing successfully on the global scene. Moreover, the millions of Indians living overseas send back more than $30 billion a year in remittances, making up 3% of the country's GDP, according to estimates by the International Labor Organization. Political groups, parlaying for support in upcoming elections, have grasped the issue, threatening boycotts and asking the Indian government to intervene behalf of its expatriates. "We feel that in the current economic environment it is imperative for global corporations to collaborate on technology and innovation," says Suresh Senapaty, the chief financial officer of Wipro , one of India's largest IT services companies. "Policies of protectionism will only hinder the revival of the world economy."

While the change in rules for H-1B hires may be popular in the U.S., it could have a long-term impact that policymakers are not foreseeing, according to a report on March 2nd researchers at Duke and Harvard universities. Disheartened by the change in visa rules, nearly 100,000 foreign workers could leave the U.S. and return to their home countries, researchers concluded. The two-year study asked those who had returned why they left the U.S., and found that increased opportunities in India and China made it easier for these highly trained workers to leave jobs in Silicon Valley and start businesses back in their home countries. "Short term, this will have no impact on the U.S., but long term this could spell disaster," says Vivek Wadhwa, the lead researcher on the study and a research associate at Harvard's law school. "When we start recovering, then the people we need are going to be in India and China."

Since 1990, the H-1B program has allowed foreigners holding at least a bachelor's degree to work for six-year spells at U.S. companies and to have a chance to apply for a green card. Companies such as Microsoft and Google have hired thousands of foreign workers on H-1B visas. It is unclear how many of them applied for—or received—green cards, but the green card backlog in the U.S. in 2006, the last year for which data are available, was more than 1 million.

At the same time, Labor Dept. and U.S. immigration statistics indicate that just a little more than half of the allotted H-1B visas went to the high-tech sector; others included workers in fields as diverse as academia, medicine, and the nonprofit world. Several studies have shown that while there is documented fraud in the H-1B visa system and that H-1B workers often depress the local wages for similar U.S. workers, these highly trained immigrants do fuel a disproportionate portion of U.S. innovation. Wadhwa points out that nearly half of Silicon Valley startups—including Google—were started by immigrants, and nearly a quarter of U.S. global patent applications are from foreigners. "Without doubt, these H-1B workers are adding to the innovation pool in the U.S.," says Wadhwa.

Barack Obama’s anti-outsourcing stance concerns India

Barack Obama’s anti-outsourcing stance concerns India
American President, Barack Obama’s anti-outsourcing movement came as a big blow to the Indian IT Industry. Of the total foreign currency earned by the Indian IT sector, 60% ($64 billion) comes from outsourcing. At present, about 1,000 American companies have shifted their jobs in abroad. Barack Obama, in his first US Congress session on February 25, 2009, said that his government would give tax breaks to companies that would retain jobs in US and vice versa. This would badly hit the American companies that have outsourced jobs in abroad.

Kamal Nath, India’s Minister of Commerce and Industry, said that he will clarify this issue with Washington. Indian government will also discuss this anti-outsourcing movement in the World Trade Organization. Mr. Nath said that his government would make sure that America’s movement is compatible with WTO when they had been talking about bi-lateral trade and movements of goods, people and services. He also said that one has to see how the US companies are using India as a base for technological development. It can not shutdown instantly.

Moreover, the US companies that are receiving bail out money would not be able to hire employees through the H-1B visa which is another major blow to the thriving Indian IT industry. As per his election agenda, Obama started this outsourcing movement to retain jobs in USA. The US President has also set goals to creat 3.5 million jobs in the country.

Obama’s decision upset the heads IT companies in India. Kris Gopalakrishnan, CEO, Infosys, said that outsourcing increased the competitiveness of US companies and it created more jobs inside the country. Ashok Soota, CMD, MindTree, said that Obama’s speech was an extension of what he had said in his campaigns. Sujata Rakhra, Vice President, Marketing and Communication, APAC, Perot Systems said that businesses today are truly global than ever before and such protectionalist measures would not only restrict innovation but would also hamper the progress of globalization.

Along with Indian IT companies, this new decision also upset many US companies that are saying that such a move would hurt US.

Obama: Virginia Tech Slaughter: Older News

Taken from a speech today from Barack Obama, isn't just ignorant, it's exploitative and offensive:

"There's also another kind of violence that we're going to have to think about. It's not necessarily the physical violence, but the violence that we perpetrate on each other in other ways," he said, and goes on to catalogue other forms of "violence."

There's the "verbal violence" of Imus.

There's "the violence of men and women who have worked all their lives and suddenly have the rug pulled out from under them because their job is moved to another country."

Ugh. Words aren't violence. And to suggest they are betrays a nonchalance about the First Amendment that's rather disturbing (but not surprising given the generally hysterical reactions to Imus). After all, if words are as bad as guns, if Imus' comments were even remotely comparable to the Virginia Tech slaughter, then words, like guns, should be heavily regulated,
right? Or even banned?

The outsourcing line was even worse. No one has the "right" to be paid by someone else for their labor. Employment in a free market is peaceful and voluntary, on both sides. So is the decision to stop that agreement, both for the laborer, who may find a better job, or for the employer, who may find someone who can do the job better, or cheaper, or both. There's nothing remotely violent about any of it.

To compare a business decision to employ cheaper labor to the senseless slaughter of innocents--even if by way of tortured, nonsensical metaphor--is really reprehensible. It reeks of exploitation. "See, the people who are really upset about this massacre, the people who really care about the victims, they vote for me, and take the same position I do on controversial issues."

Also, does this also make the poor people in developing countries who take outsourced jobs complicit in the "violence?"

Jesus. Couldn't the politicians wait a full 48 hours before propping up the dead for campaign speeches?

Tax Subsidies Abolished for Outsourcers:Barack Obama

On Tuesday night in Washington, US President Barack Obama proposed abolishing tax subsidies for American companies who outsource work offshore. It may be premature to start a heated debate on the nine words he devoted to this issue in a fairly long speech to a joint session of the US Congress, but it is necessary to establish the fact that in the real world his intentions may well remain only a paper promise.It’s somewhat as feasible as commanding a rollback of the tides!

Outsourcing, shorn of all its political and cultural contexts, is a business requirement, pure and simple. It is necessary for companies to retain competitiveness and enhance shareholder value, and no amount of administrative fiats can reverse or stall a commercial entity’s drive to do so.

Punitive measures in the United States to reduce outsourcing will no doubt affect Indian technology firms in the short term. Even now, a major chunk of revenue for these companies flow in from the US, and any protectionist measure will undoubtedly have a negative impact on the fiscal health as well as market capitalisation of Indian IT companies.

However, in the long run, it will prove to be more of an opportunity for sustained growth. Indian companies will start seriously exploring and tapping other markets to broaden their client base. Companies in the larger non-American world too need to enhance competitiveness and increase returns for stakeholders, and outsourcing is an essential tool they will need to do so. And it is difficult to think of a stronger vendor than India for such services globally.

Unfortunately for American companies, President Obama’s plans may actually end up damaging their long-term prospects far more than the short-term effects on Indian technology service providers. The competitiveness of US companies is bound to suffer in a globalised economy as well as diminish the returns they in turn can pass on to their stakeholders.

US companies will have to make a hard choice at this stage. No outsourcing means companies will have to strictly regulate their overheads, and be prepared to face far greater competitive pressure. Either way, their profit margins will take a dip.

Therefore, the main negative fallout of Mr Obama’s proposal will be on the very firms that he wishes to encourage to hire more Americans and at the expense of the American stakeholders of these companies.Earlier, the Bush administration had argued that tax cuts and deregulation actually prevent American firms from needlessly exporting jobs, even though US regulations were weaker and corporate tax rates lower than those in most other countries.

The argument also was that the efficiency of US capital would increase through optimal outsourcing policies and practices by rewarding companies with tax breaks for outsourcing work. These companies become more competitive globally and are also able to improve their bottomlines and enhance shareholder returns. President Obama’s proposal to end tax subsidies for outsourcing companies fly against the face of these arguments, and are also extremely unlikely to significantly reduce the lure of labour arbitrage.

For most companies the decision to outsource is not an easy one, and it only gets tougher when you have no option but to farm out services to a third party purely for economic reasons. But apart from the cost factor, there are other compelling reasons for outsourcing. The other main factor is the availability and use of technology.

Historically, companies have found it hard to manage advanced technologies over which they had no control. They were unable to update or provide technology solutions to critical business requirements in spite of having access to the right technology. In such a situation, it made sense to move out those jobs to places where it finds the right balance with the latest technologies that suited their business model.

This is one of the main reasons why outsourcing gained so much credibility and momentum over the past years.When you base taxation policy on populist expediency and not on sound economics or even ground reality, companies might stay for some time but when the going gets really tough they will relocate to places where they get tax incentives. They go where they can make money and that is sound business, if not sensible economics.

When you take away the tax cuts, you accelerate that process much more instead of stemming it.The key deciding factor here will be the cost of quality labour in the preferred outsourcing destinations. If US companies find that even with the added tax liability factored in, the cost of outsourced labour is cheaper than US labour, they will continue to outsource. Executive fiat or not.

For Indian IT-enabled services and BPO firms, this means more severe pressure on their margins and sustained labour cost control. This also means that the Indian vendors have to start investing heavily in strengthening internal operational processes and governance systems that can closely track the delivery efficiency of their organisations.

Mphasis May hir more Americans: Outsourcing

Mumbai: MphasiS Ltd, the Bangalore-based IT services firm that is now a part of international technology giant Hewlett-Packard, may add more Americans to its workforce to avail the tax breaks announced by US President Barack Obama on February 25.

Speaking to DNA Money, Ganesh Ayyar, chief executive officer, MphasiS Ltd, said, "The option of increasing Americans in our workforce is open to us in view of the recent announcements by US authorities. However, we will have to factor in many other things before that, like onsite cost versus margins. We also have to evaluate client willingness."

However, an analyst tracking the sector felt IT companies talking of recruiting more Americans and actually walking the talk were two different things. "Putting more people onsite will send their costs soaring. Moreover, clients might not be willing to pay that much," he said on the condition of anonymity. The analyst, however, added that MphasiS earns 94% of its revenues through time and material (T&M) contracts and so, is in the position to renegotiate contracts if onsite postings increase.

Of the 29,988 employees the company has, 1,721 work onsite, with the rest being offshore. As much as three-fourth of the company's revenues comes from offshore work, with onsite contributing the rest. MPhasiS' billing rate for onsite is about $71 per hour and for offshore, $17.
The US region contributed 67% to its revenues in the first quarter (November-January) of financial year 2008-09. MphasiS follows a November to October fiscal. In Q1, Europe, India and the Middle East and Asia Pacific accounted for 22%, 7% and 4% of revenues, respectively.

Its parent Hewlett-Packard, through its acquisition of US-based EDS Corporation, contributed 45% to MphasiS' revenues in the first quarter. "This is the first time we have taken into account business from Hewlett-Packard in our books after the acquisition. We will definitely look to increase its contribution further, because the EDS-Hewlett Packard combine too has grown five times in revenues. So, the relationship holds huge potential for us," said Ayyar. MphasiS gets outsourcing and infrastructure solutions projects from Hewlett-Packard.


Meanwhile, in these times of price negotiations from clients, the company may look at increasing the work hours of employees for cost benefits. However, Ayyar said, "Nothing of that sort is in practice at the moment." MphasiS added 9 new clients in its first quarter, including six through the Hewlett-Packard relationship. The company's revenues stood at Rs 9,77.7 crore in the first quarter of FY09, compared with Rs 8,94.72 crore in the quarter before that.

However, the BPO business fared badly due to project cancellations from a few clients and also due to the appreciation of rupee against the pound. MphasiS earns 43% of its revenues from the banking, financial services and insurance sector, with technology, manufacturing and retail, and telecom providing 25%, 13% and 9%, respectively.

Obama: Against Outsourcing

Continuing to play the anti-outsourcing card, Democrat presidential front-runner Barack Obama on Wednesday said while America cannot "shy away" from globalisation, it would have to take measures to ensure that jobs are not shipped overseas.

"We have to stop providing tax breaks for companies that are shipping jobs overseas and give those tax breaks to companies that are investing here in the United States of America," Obama said in during a debate with rival Senator Hillary Clinton in Cleaveland, Ohio.

The Illinois Senator, playing to the gallery of those workers who have been displaced in manufacturing jobs as a result of the North American Free Trade Agreement (NAFTA) and generally to the anti-outsourcing crowd, said he would ensure that every pact the US signs has environmental, safety and labour standards to protect workers and consumers alike.

"We can't have toys with lead paint in them that our children are playing with. We can't have medicines that are actually making people more sick instead of better because they're produced overseas," Obama said.

At the same time, he said, Americans cannot "shy away" from globalisation. "We can't draw a moat around us."

"The problem is we've been negotiating just looking at corporate profits and what's good for multinationals," the African-American Senator said adding, "as President, what I want to be is an advocate on behalf of workers".

Facing the heat from US presidential hopefuls who blamed "shipping jobs" to China and India for rising US unemployment, the India Inc had last week launched a counter offensive through the media, telling Americans that the industry is creating new work opportunities for them

Barrack Obama: on outsourcing

Barrack Obama: on outsourcing

President Barrack Obama's views on 'outsourcing', articulated in the run up to the US presidential elections, is a real cause for concern for the $60-billion Indian IT and ITES industry, which has grown rapidly on US orders, in the last over a decade. Obama had spelt out his views against outsourcing and is opposed to companies shipping jobs overseas.

However, one hopes pragmatism will replace the rhetoric, now that he is the US President and that he will see the mutually beneficial, 'win-win' strategic advantages of outsourcing. A closer look at outsourcing will, in fact, reveal that the game now is not just irreversible, but any adverse action against it will be mutually harmful. First of all, outsourcing in IT and ITES industries is no different from the larger trend of outsourced 'contract manufacturing' in the manufacturing sector and hence it should not be looked at with disdain.

In the past, US lost jobs in textiles and garments, shoe and toy making, and in other low-stuff industries, first to Japan, then to South Korea and later to China and other low-cost countries. Even in computer hardware, Intel ceded the low-cost advantage in chip making to companies in South Korea and Taiwan. Dell and IBM did the same in desktop computers and laptops.

Today, the ground reality is that US no longer has the capability and infrastructure to manufacture such low-cost products. The trend is the same in the IT and ITES sector and it is not an exaggeration to say that US has no (ready built) infrastructure left to enter and compete in low-end IT products and services. Indian IT industry may have grown exponentially, but mostly the work 'outsourced' is what some people call as 'coolies' jobs.

It is only recently that Indian giants, such as TCS, Infosys and Wipro are offering some competition to US biggies IBM and HP in the services contracts. But, volumes and values fetched so far are negligible. Secondly, US companies have hugely benefited by outsourcing in general and in R&D activities in particular. Some higher-end jobs outsourced to India have created high value products at low costs and the US companies have been able to sell those products globally, including in India and obtain higher returns. In fact, money spent in India in such activities may ultimately be recovered from sale of such products here.

Thirdly, Indian IT companies have themselves been huge consumers of hardware products from the US companies. Generally, US-based IBM, HP and Sun Microsystems have been in the race to sell hardware in India. Networking companies like Cisco have also been selling hardware for the fixed phones, the wireless and for the internet.

Thus while Indian software coders write codes for US companies, US companies find readymade market for 'Made in US' hardware stuff. Fourthly, Indian IT and ITES companies are also huge consumers of 'Made in US' software. Not only the hardware giants, such as IBM, HP, Sun and Cisco sell their software services, others like Microsoft now have a huge market share in all types of industrial and consumer software.

Fifthly, the outsourcing has created indirect markets for US companies, as the overall computer literacy has risen by larger penetration of computers and computers softwares. For example, by adopting e-governance, the government sector has created a huge market for hardware and software.

Markets have expanded for products related to security, data-warehousing, etc. Thus benefits to the US companies by way of local demand for computer products in India may far exceed the presumed direct loss of a few thousand jobs in US. Sixthly, it should not be presumed that if the US companies were forced to do their work locally under some legal or other compulsion, the software coders' jobs would go to US citizens only. Sooner or later, companies will find a way out to work circumvent those compulsions.In nutshell, bad times call for adopting flexible and innovative strategies and serving the customers in a better manner, so that when the markets recover, Indian IT companies develop better competencies, products, services and the skill-sets necessary to serve the future markets.