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K. Bharat Kumar
Moumita Bakshi Chatterjee

Chennai/New Delhi, Aug. 29

Despite anti-outsourcing overtones in the acceptance speech of Mr Barack Obama, the Democrats’ US presidential nominee, Indian IT services companies can take some heart from the complete lack of reference to defence spending.

Speaking to Business Line, Mr Shailesh Shah, Chief Strategy Officer at Satyam Computer Services said, “Obama did not comment on defence spending. That is positive. It means it would continue. And that is good news to Indian IT services companies that work with defence agencies in the US, in areas such as engineering IT services.”

Mr Shah said that he also took away the message that Mr Obama wouldn’t force the Non-Proliferation Treaty on India, in the context of the nuclear deal between the two countries, and would continue the line that the US President, Mr George Bush Jr, had taken so far.

Mr Phaneesh Murthy, CEO, iGate Corporation, was intrigued by Mr Obama’s promise to eliminate capital gains taxes for small businesses and start-ups that create high-wage and high-tech jobs of ‘tomorrow’. “That is not clear. No business has capital gains.”

If a shareholder makes a profit by selling stake in a company for a price higher than that at which he bought it, that is capital gains. “If Obama means he would eliminate taxes on shareholders’ capital gains, that would be Christmas to many ears, especially those of Venture Capitalists.”

But, he added, it is important to understand the nuances of what the presidential nominee meant before commenting on his promises.

According to Mr Shiva Ramani, CEO, Cybernet-SlashSupport, an IT services company, eliminating capital gains tax on this front would fuel further innovation. “It would be a positive move that could help harbour innovation in the US, especially with innovation moving away from there.”

If Mr Obama does cut taxes for 95 per cent of working families in the US as he has promised, then it could mean that employers could afford to dole out lesser increments than they usually do.

Mr Shah said, “It is early days yet. If inflation stays in the 2-2.5 per cent range and Obama manages to give those tax cuts, then companies like us can look to keep salary increments in the sub-4 per cent range, instead of 6 per cent or more.”

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