'Protectionism in US disturbing'

Nasscom on Wednesday said that the protectionist moves in the US were ‘disturbing’ even though it might not have an immediate impact on India’s information technology (IT) industry. The industry body, however, said that the talk by US President Barack Obama to increase spending on research and development (R&D) was expected to create a positive impact in terms of creating employment opportunities there, which will be helpful for the IT industry as well.

“The recent (protectionist) trends in the US are disturbing. We do not know what is coming up next, in what form and shape,” Som Mittal, chairman of Nasscom, said here in the sidelines of a Nasscom conference. He added, “Right now, it is restricted to the public sector and it doesn’t affect the US companies who outsource their technology services offshore.”

Mittal said the industry expected to hear more noise on the issue in view of the forthcoming elections to the US Senate and House of Representatives.

The Indian IT services industry which derives over 60 per cent of its revenues from the US is going through a tough time, owing to the protectionist moves by the US government at a time when the industry is just emerging out the impact of global economic downturn.

The US government has recently decided to nearly double the visa application fee. This was followed by the state of Ohio in the US imposing a ban on outsourcing of government contracts to offshore locations including India. Even though these developments were not expected to impact the IT industry in India much, but it makes the future of the Indian IT outsourcing industry ‘uncertain’, thus stopping them from taking any long-term decisions.

“In a scenario where companies in the West are already conservative on technology spending, this kind of political rhetoric is just adding to the uncertainty,” said John McCarthy, VP at Forrester Research. He however added that there was no reason for Indian IT companies to be worried about. “US companies have no option but to depend on India since US does not have enough talent,” he added.