For a sector that eagerly tunes in to every signal emanating from the US market, the Indian outsourcing industry is reading President, Mr Barack Obama's $447-billion package to galvanise the American economy, quite “positively.”
At the same time, the Indian tech industry appears somewhat relieved that Mr Obama's 40-minute address to the joint session of Congress did not include any of the usual political rhetoric around US jobs being taken away by offshoring.
“We are pleasantly surprised that he is not referring to it any more. He (the US President) referred to all the right issues around creation of jobs, rather than offshoring, which has caused very little or no unemployment in the US,” Mr Pramod Bhasin, Vice-Chairman (non-executive) of Genpact, said.
The crux of Mr Obama's “American Jobs Act” involves payroll and investment spending tax cuts, creation of new jobs for construction workers, teachers and veterans, and proposes tax credits to companies that hire new workers and tax relief for small business owners. It also seeks to extend unemployment insurance for another year.
Software association Nasscom's President, Mr Som Mittal, says that US needed some support of this nature to encourage companies to create jobs.
“This is the first time that some positive steps that talk of job creation are being taken. Mr Obama has talked of re-skilling. Indian companies operating in the US have been re-skilling veterans and providing them jobs. We all want the US to be back on its growth trajectory,” said Mr Mittal.
It may be noted that the fortunes of Indian tech industry are closely entwined with the health of the Western economies, as 80 per cent of India's IT-BPO export revenues come from the US and European markets alone.
MindTree CFO, Mr Rostow Ravanan, said that measures to stimulate US employment and its economy will have a huge positive effect on the industry. However, according to him, much more needs to be done, and faster, to revive the health of the US economy. The US, he feels, has identified the “illness and the medicine” but is not “administering strong enough doses.”
“In the next three to five years, the biggest boost the Indian industry can get is from the pick-up and growth of the US economy… If employment comes back, spending and the overall economy get a thrust, it means that businesses can also spend more,” he says.
The Indian industry is also seeking to draw a distinction between the prevailing unemployment in sectors such as manufacturing, retail and construction, and the hiring drive by Indian IT companies in the US market.
“Many Indian IT companies are increasing their presence in the US, and, as such, unemployment in the IT industry in the US is fairly low. So, offshoring in IT is not a threat,” says Mr Ravanan.
This view also resonates with Nasscom's Mr Mittal, who argues that job losses in the US have largely been in sectors such as construction, manufacturing and retail.
“In our space, no job has been lost and, if at all, it was because people did not have the right skills…Indian companies have been hiring and it is good that it should get accelerated,” he adds.
Last evening, Genpact announced its plans to increase investment of dollars and man hours in training and talent development in the US.
The company said it had doubled its US workforce in the past 18 months and “expects to continue to increase its US workforce through aggressive recruiting initiatives for business development, operations, analytics and reengineering positions.”