The New Nation - Internet Edition

Reuters, Bangalore

Indian IT and IT-services companies seem undaunted by the potential impact from U.S. President-elect Barack Obama's proposal to repeal tax breaks for companies that outsource certain operations to offshore centers.

"I don't see Obama doing anything terribly drastic. I think he has enough on his plate; he has got a trillion-dollar bailout and probably got another trillion dollars coming on top of that which he has to finance," Genpact Ltd's Chief Executive Pramod Bhasin said at the Reuters India Investment Summit.

Obama's tax plans are unlikely to affect the outsourcing industry because of the scarcity of IT talent in the United States, Suresh Senapaty, chief financial officer of Wipro Ltd , told the summit, held at Reuters Bangalore office.

Over the past few years, IT-services firms armed with competitive, English-speaking professionals working for relatively cheap wages have cashed in on an outsourcing boom.

But they are now experiencing a lull in growth as the U.S. economy faces one of the worst crises in history.

Obama's plans to encourage U.S. firms to keep jobs in the country have raised concerns that Indian IT-services firms could lose out as more services are retained in the United States.

"Barack Obama will repeal tax breaks that reward corporations that retain their earnings overseas, and will use those savings to lower corporate tax rates for companies that expand or start operations in the United States," according to Obama's website, www.barackobama.com .