Obama's statement has nothing to do with outsourcing: IT

The IT industry on Wednesday said that US president Obama's Bangalore-Buffalo reference had been misintepreted and that it had nothing to do with 'outsourcing' or 'offshoring' or either with India.

Speaking to reporters while presenting the NASSCOM-McKinsey Report on Perspective 2020, NASSCOM president Som Mittal said "I think it is not an issue of India but how US companies there and US subsidiaries are structured and the taxation followed by US over the years".

"It has nothing to do with India", said Mittal. The president has said that the additional taxes that he would get would be invested to do research training and so on to create jobs. "I think that (creating more jobs) should be welcomed", said Mittal.

"Our (IT) industry is actually a part of the solution that America requires to to become more competitive so that transformation happens faster and not an issue of  a problem we have created."

On whether the issue impacts India, he said, "If we see it impacting us in any way, as a bill is drafted, we will do our needful", he said.

The industry, he said, could also focus on the non-US markets which also contribute to the revenues.

Reacting to the statement, NASSCOM chairman Pramod Bhasin said the statement had been misintepreted. "It has nothing to do with outsourcing, it has nothing to do with outshoring".

"I think he (president) got his geography wrong". The manufacturing jobs, he said, were going to Beijing.

"It is a domestic tax issue", said Bhasin.

He said the US business model was not based on a single piece of legislation and did not make business sense to base one's business on tax rates. Issues like availability of talent and markets were other factors that counted.

Speaking on the issue, Kiran Karnik, former NASSCOM head said such a move would result in the US being the hardest hit. He said even the G-20 had pointed out that protectionism was not an option as if one country adopted it, others followed.

At a time when the world economy was picking up, "sending a protectionism signal is very negative".

According to Mittal,"G-20 has confirmed that protectionism is bad as the world ahs gone far and got more globalised. Protectionism is responded by protectionism".

Economies across the world, including the US, has gained a lot from reaching out to markets, he said.

"There is a rhetoric on protectionism. But most of the bills get diluted in end", he added.

On the issue of visas, Mittal said that the bill on visa had come from a senator, not from the administration. "Last year the bill had come, but had been defeated," he said.

"The US very much realises that the need is not in a change in H1B or L1 visa, but what they need is a comprehensive reform", he said.

The US has been facing issues relating to illegal immigration and hiring foreign students, but unable to give them green cards.

"The US is the only country which does not have a temporary visa or service visa or work permit as in Europe. All these countries are liberal in work permits as they realise there is a shortage of people and they need people for short term".

"What we need is to work with law makers there and in the industry in the US and to be able to tell them that these provisions if they make will hurt the US economy", said Mittal.

He said the large number of students who go there have helped the US economy and many innovations in companies in Google and Yahoo have taken place, not because of Americans, but because of people from this side of the globe.

"We will keeep working on this. We are confident that the bill will gets converted into a comprehensive reform bill".

"Our objective will be not to talk about H1B or L1, but a service visa", he said.