Obama's maiden voyage

As US President Barack Obama primes himself for his imminent visit to India next month, the question on everyone’s lips is whether or not he will be able to rebuild the bridges he burnt with the strong anti-outsourcing stance he has...

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As US President Barack Obama primes himself for his imminent visit to India next month, the question on everyone’s lips is whether or not he will be able to rebuild the bridges he burnt with the strong anti-outsourcing stance he has demonstrated in recent times.

By visiting India earlier in his presidency than any US leader before, Obama’s visit is intended to be symbolic of the new US-India relationship. There are, however, plenty of bumps in the road ahead which the President will have to negotiate before the trip can be classed as a success.

Indeed, ahead of the Obama visit, anxiety is cutting through India's outsourcing industry over the President's policies, which include a determination to block tax breaks to companies who choose to globalise their IT operations, along with the HB-1 visa which will restrict the hiring of foreign workers.

How fair are these measures, though?

It’s clear that organisations all over the world benefit from the value that India is adding - including those in the US. For example, Tata Consultancy Services, India's largest IT services firm, runs a project in Ohio that employs over 300 people, which, as it stands, could be in danger.

It’s true that the largest worry across America today is the nature of the economic recovery, which has seen unemployment levels reach close to 10%.

Ohio's struggling governor is up for re-election in November and with a Republican accusation that outsourcing has cost the state thousands of jobs during the Ohio governor's occupancy, he, issued an executive order banning outsourcing from his state.

The Ohio ban and the announcement of an end to tax breaks could impact across the entire Indian IT industry; a situation which will only become worse if other US states follow suit.

The industry has grown at a rapid pace for the best part of a decade, much of this stemming from US companies offshoring their back-office procedures.

Indeed, as much as 60% of India's IT operations revenue comes from outsourcing and a large chunk of it from the US. India is quickly becoming the world’s back office and as a result, the US has shifted jobs to India for lower costs and greater efficiency.

It’s important to remember, however, that before any decision is made to offshore services, all businesses - not just those in the US - will identify where their core competencies lie, and will only outsource processes where they are not efficient.

This means that by offshoring services, US companies are becoming more efficient at delivering the things they are good at, which can, in turn, mean more jobs are created as a result.

Perhaps it’s time that Obama was told that a ban on outsourcing is not necessarily the answer to his domestic troubles? Everyone understands that the economic downturn has seen the President come under increased pressure to protect US industry - but perhaps his visit will help him to see the bigger picture, as well as the wider ramifications of his actions.

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