Calcutta, Jan. 27: Latin American countries, such as the Dominican Republic and Mexico, are encouraging Indian IT companies to set up centres by offering them tax sops.
Indian IT companies are facing many problems at home, including the appreciation of the rupee and issues relating to a minimum alternate tax.
They may also cease to enjoy tax holiday under the Software Technology Parks of India scheme.
According to the ambassador of Mexico, Rogelio Granguillhome, We have six of the top Indian companies, including TCS, Wipro, Infosys and Sasken, having centres in our country. We are in talks with Satyam, which can set up a centre as well.
Around 2,000 Mexican engineers are employed at various Indian IT companies. The number will increase to 5,000 by 2010, he said at an interactive session organised by the Merchants Chamber of Commerce here.
A delegation of ambassadors from some Latin American and Caribbean countries is visiting Calcutta to explore business opportunities in various sectors.
We have tax holidays and sops for IT companies investing in Mexico. It is decided on a project-to-project basis and in a joint consultation at the federal level. Provincial governments also have their own sets of fiscal incentives, Granguillhome said.
Indian IT companies have a wide range of options in the Latin American countries —from locating call centres for the Spanish market to developing high-end software.
The ambassador of the Dominican Republic, Hans Dannenberg, said, Information technology is one of the principal reasons behind our setting up a diplomatic mission in India. We already have 14 Indian IT companies including NIIT and TCS and are in talks with Wipro and Infosys.
Indian IT companies employ about 200 Dominican Republic citizens now.
The IT centres undertake a variety of outsourcing activities. The Dominican Republic aims to become the IT hub for such operations in the region.
Companies from the US are also tilting towards Latin American countries because of their proximity and a chance to perform a higher percentage of offsite work at a cheaper cost.
Mexico holds some advantages vis-à-vis India for firms in the US. These are related to the country being the USs neighbour.
Because of the US legislative restrictions, certain projects, involving sensitive aviation and energy technologies, are more likely to go to Mexico than to India, which is a nuclear nation.
Brazil, Mexico and Chile are the leading offshoring destinations for companies based in the US, besides India.
Smaller countries such as the Dominican Republic, Paraguay, Colombia are building up their expertise in niche offshoring activities.
MoU with Columbia
Columbian ambassador Juan Alfredo Pinto Saavdra has offered to sign a memorandum of understanding (MOU) with the Merchants Chamber of Commerce to promote micro, small and medium enterprises. The MoU will be signed tomorrow.