According to published reports, analysts both overseas and in the U.S. note that President Obama’s State of the Union statement about revoking tax breaks for companies outsourcing jobs could open a ‘Pandora’s box’ full of problems.
A survey by independent analysts in India, Asia Sentinel of industry officials, finds that the nature of outsourcing itself does not lend itself to taxation on U.S. firms outsourcing jobs abroad.
New Delhi-based consultant, John Daval told Asiasentinel in an interview,
“This is a really a complex issue as enormous job losses have taken place in the US and it is difficult to quantify the exact tax losses triggered by outsourcing.”
He added, “On the contrary, if Obama’s measures are implemented, US consumers may end up paying higher taxes as service costs will also shoot up. Ultimately, this embargo will have to go, as it also violates the American tenets of free trade and globalization.”
Daval noted that the outsourcing has led to more competitiveness among U.S. firms and generated more jobs within the U.S. as well.
Analysts agree that if the President’s tax policies are executed, it remains uncertain how these measures will be carried out. For instance, how would the administration target corporations that find loopholes against taxation or how would the U.S. government trace the flow of work out of the country? These questions have left the outsourcing industry baffled since the comments were made in a televised speech last week.
Nonetheless, it is an issue that has fervent followers on both sides. Some Americans worry that unemployment is skyrocketing in the wake of a recession brought on the by the subprime debacle and an ensuing credit crisis. A Forrester Research report found that approximately 3.3 million U.S. jobs are likely to be culled due to outsourcing for the fifteen years up to 2015. Moreover, Indian BPO vendors are projected to dominate 10 percent of the world’s market by the end of 2010, according to advisory firm Gartner.
Yet another school of thought takes the position that a move to diminish outsourcing would mean a significant import for India. Indian is among the five hotspots for off shoring along with the Philippines, Ireland, China and Brazil, reports international advisory firm Tholons.
6 users commented in " President Obama Slams Outsourcing of American Jobs "
Follow-up comment rss or Leave a TrackbackThere is no such thing as “Free Trade”, so get that concept out of your head. Step one in putting American workers first (as India and China do with thier residents) is to force companies to report on what they are doing. Without data it is hard to craft a policy that will reward the right behavior and tax or punish the wrong behavior.
Anyone who dumps thier IT workers into the US Unemployment pool for cheaper Offshore outsourcing is anti-American, simple as that!
The “global” playing field will only be level when it is no longer cost effective for companies to hire labor in India, China and other popular outsourcing destinations. America needs to enforce a “VIRTUAL FOREIGN EMPLOYEE” tax on all US corporations that hire foreign employees to work on US based projects. If skilled engineers from foreign countries want to work for US corporations on product versions that will be sold to US consumers then allow these skilled foreign engineers do it from the US headquarters of these corporations not from their home countries such as India. Until a “virtual foreign employee tax” is enacted no one in America could compete with someone in India or China as a lot of people living in those countries could afford to live on $5,000 USD /yr. It’s not a matter of skill or education those are cop out excuses the real decision about outsourcing is cost and payroll savings. Trust me I know I am a former Senior EVP of a large Fortune500 technology company and I was in charge of locating and managing the company’s outsourcing partners. I hope Obama tackles this issue. I hate seeing our country in this situation.
I feel like I’m preaching to the choir here, so I’ll just say “agree 100%”
Does anyone have a list of ALL the companies that outsource? Would love to post that in as many places as possible. And they want us to focus on illegal immigration….those “illegal” immigrants are being employed by American companies…immigration is not an accident.so what’s really the root of the problem? All they want to do is work and provide for their families back home…just like the rest of us .the faster we grant legal status and tax them, the faster the problem will go away. Let’s switch around the terminology. Let’s call it illegal outsourcing and legal immigration. And btw, I don’t see my AT&T bill getting any lower since they offshore-outsourced their customer service all over the world!
@john beesly,, last time i checked america isnt a socialist economy,, no one would fire competent work force to hire non competent work force even if it is cheaper so if there is a portion of your so called american I.T. workers work force moving into the Unemployment pool thats ure loss. do a S.W.O.T analysis and put ureself back on the market.. quit whining. And if u want a government which is non capitalistic and people oriented move to cuba.
Outsourcing work from the U.S.A. to foreign countries should be accommpanied with a 50% surcharge tax also called the Greed Tax. This outsoucing will lead to a great depression and destableization of the working classes in the U.S.A. and the unemployment problems that will occur will lead to unrest in the masses of people in our country. These many companies outsorce their work for fatter profits and higher stock valuations and are traitors to the American people. obama wake up and pull the pin on the hand grenade. A patriot.
Obama is just lost. Now to add insult to injury he is drinking the CEO and GOP koolaid that outsourcing american companies jobs to India and China is good for America. We have a systemic unemployment problem in the USA not a cyclical one. Unless we get back some of the mfg. jobs from China and some of the engineering jobs from India we will have to get used to a 10-20% unemployment rate here in the US. There simply isnt anything that either party can do to fix this unless they tackle the outsourcing issue. It’s sad cuz I am a democrat. The truth is that I can’t vote for Obama in 2012 with his new position on outsourcing.
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