NASSCOM Update On Its U.S. Visit
NASSCOM
2009-03-10
There are significant concerns globally particularly in developed nations regarding the growing unemployment and the economic downturn. Specifically, in the U.S. increasing pressure is being created from local constituents to protect jobs, as unemployment looks to breach the 10% mark.
Recent protectionist measures such as the "Buy America" clause, discussion on removal of tax breaks for companies creating jobs outside the U.S. and proposed H-1B legislation are a culmination of the same even though these were diluted significantly as it would have hurt the U.S. economy.
NASSCOM on its recent visit to the U.S., met a large cross section of stakeholders - the U.S. administration, elected representatives of the Congress, various associations, U.S. headquartered companies and customer companies as well.
We actively raised the need for global collaboration if the world is to come out of this economic downturn quickly. Measures such as closing borders for trade and promoting protectionism presents a serious risk to the world economy today. Nothing should be done which seem attractive and populist in the short term but will have a long term negative impact.
The United States has been leader in international trade, and in 2008, more than 50% of the revenues of large U.S. companies came from outside the country. Globalization and global sourcing has helped U.S. companies gain technology and innovation edge and access to the best resources globally.
The Indian IT-BPO industry has played a crucial role in helping U.S. companies tap these benefits and remains committed to being a part of the solution to help tide over this crisis. It is imperative that the U.S. and all countries continue to be proponents of free trade. With more countries impacted with the slowdown, such protectionism would trigger similar protectionist measures. The world economy will find it difficult to reverse this trend quickly. Restricted trade affects businesses, incomes and employment in other countries thus resulting in lower spending and subsequently lower demand for U.S. goods and services globally.
Having met with various stakeholders and experts and discussed the protectionist measures with them, NASSCOM does not see the "Buy America" clause or the discussion on removal of "tax breaks for U.S. companies that create jobs offshore" provisions in their current forms having any impact on the Indian IT-BPO industry. We are confident that U.S. will consider all factors as they have in the stimulus bill and other proposed initiatives for reviving the economy and employment.
However, the proposed amendment to the H-1 B visa legislation is of extreme concern. In its current form the amendment seem to isolate and unfairly target Indian IT companies and severely restrict the level-playing field. Contrary to popular belief of Indian companies taking majority of H-1 B visas, the Indian IT industry constitutes only 11% of the total visas issued in 2008. These H-1 B visas are used for providing technically qualified talent, open new markets, accelerate innovation and increase competitiveness.
NASSCOM is working closely with the policy makers and stakeholders in the U.S. congress and administration to ensure that the Indian IT industry is not disadvantaged in any manner. We had a healthy discussion with Senator Charles Grassley from Iowa who is spearheading the H-1 B legislation and will be working with him to ensure that while we apprehend and stop any fraudulent use of H1-B visas, legitimate business users are not affected.
We have full faith in the U.S. governance system and expect that any major policy changes will be well debated and considered before it is legislated.
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