US' anti-outsourcing steps to hit Indian IT mkt: Experts

Ohio's ban came just weeks after the US government hiked the fee for H-1B and L1 visas, a move that would hurt Indian IT players.

"The protectionist trend of the USA is definitely worrying and creates uncertainty for the sector in the medium term as the trend might spread to the other states and corporate bodies," a Sharekhan report said.

Ohio Governor Ted Strickland of Democratic Party has banned outsourcing saying this undermines economic development and has unacceptable business consequences for his state.

"The Ohio move will have long-term impact as most of Indian IT companies have huge exposure to the US market overall. This will not only impact the companies financially but psychologically too," SMC Capitals Equity Head Jagannathan Thunuguntla said.
Last week, US President Barak Obama too raised the outsourcing bogey, stressing that he would end "tax breaks" for companies that "create jobs and profits in other countries".

The move comes ahead of the US President Barack Obama's visit to India in November and follows a controversial legislation that increased H-1B and L1 visa fees, hitting India's over USD 50-billion IT industry.

Indian IT companies like Infosys Technologies, Wipro, HCL Technologies and TCS get 60 per cent of their export revenue from the US.
"The move may dampen the Indian IT companies in a long-run, amid fears that other US states may too follow the suit in order to create local jobs," Ashika Brokers Research Head Paras Bothra said.

Voicing a similar note, IT and BPO industry apex body Nasscom had said, "Ohio state's proposed ban on outsourcing of government IT projects comes at a time when the November elections to the United State Congress and Ohio governorship are drawing nearer."

But some analysts feel that this move is a political gimmick and will not have much impact on the Indian IT companies.

"More than the IT companies, MNC's like IBM and Accenture are more exposed to the fears of a ban. It's a political gimmick and moreover a temporary sentiment," Angel Broking Research analyst Srishti Anand said.

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