IMPACT OF OBAMA’S

OUTSOURCING AND
OFFSHORING POLICIES

BY; DHIRENDRA
SINGH
ROLL.NO.-30
MBA GENERAL,SEC-A
INTRODUCTION

 OFFSHORING
 WHEN A US COMPANY SENDS JOBS THAT ONCE EXISTED WITHIN
THAT US COMPANY OVERSEAS TO A SUBSIDARY OF ITS OWN.
 OUTSOURCING

 WHEN A US COMPANY PAYS ANOTHER COMPANY ALTOGETHER

FOR DOING THAT JOB.
 PAST
SCENARIO
OUTSOURCING HAS SEEN A SCORING GROUTH IN PAST
FEW YEARS WITH AN ANNUAL GROUTH RATEEXCEEDING
40%YEAR ON YEAR IT HAS HELPED LARGE INDIAN IT
COMPANY AND CORPORATIONS LIKE IBM
PRESENT SCENARIO
 US COMPANIES HIRE INDIANS BECAUSE THEY COST AS
LITTLE AS I/5 OR 1/6 OF THEIR AMERICAN COUNTERPARTS
AND OFTEN PRODUCE THE SAME QUALITY OF WORK.
 AS FAR AS OUTSOURCING GOES THE US SUBSIDARIES OF
INDIAN COMPANIES LIKE INFOSYS OR TCS DO HAVE SOME
EARNINGS IN THE US OR FROM SOME NON INDIAN BASED
OPERATIONS BUT THE BULK OF THE EARNINGS THAT ADD
UP TO BILLION OF DOLLARS A YEAR ARE GENERATED IN
INDIA.
 AFTER A DECADE OF OUTSOURCING HELPED TRANSFORM
INDIA INTO MUCH OF WORLDS BACK OFFICE. INDIANS ARE
WORRIED THAT PRESIDENTS OBAMA NEW POLICY AND
SLOW IN GLOBAL ECONOMY WILL CAST A SHADOW OVER
ONE OF THE FASTEST GROWING SECTORS OF THEIR
ECONOMY.
FUTURE ASPECT
 ON MAY 4 OBAMA SAID “YOU SHOULD PAY LOWER TAXES IF YOU CREATE
A JOB IN BANGLORE ,INDIA THAN IF YOU CREATE ONE IN BUFFALO NEW
YORK”.
 DUE TO TAX CODE REVISION OFFSHORING CAN BECOME SLIGHTLY
MORE EXPENSIVE FOR US COMPANIES, WITH THE EXTENT OF THE
INCREASE DEPENDING ON THE TAX RATE OF THE COUNTRY THE JOBS
GO TO.
 THE CHANGE IN DEFERRALS POLICY MIGHT JUST ENCOURAGE
COMPANIES TO MERGE IN FOREIGN MULTINATIONALS, OR MOVE THEIR
HEADQUATERS OVERSEAS SO THAT THEY FALL UNDER A DIFFERENT
COUNTRY’S TERRITORIAL TAX SYSTEM.
 IF OBAMA MAKES IT DIFFICULT FOR US COMPANIES TO SEND JOBS
OVERSEAS OR HIRE USING H1-B VISAS,INDIA’S HUGE IT SECTOR COULD
SUFFER.

MYSUGGESTION
INDIAN IT MAJORS WILL HAVE TO DEVISE WAYS OF HAVING A BIGGER
ONSITE PRESENCEAND TO MOVE AWAY FROM AN OFFSHORE CENTRIC
DELIVERY MODAL,THIS WILL HAVE AN IMPACT PF THE PROFIT MARGINS
THAT THEY HAVE BEEN USED SO LONG,BUT I S STILL IMPORTANT FOR TERM
VIABILITY OF THEIR BUSINESS