The Telegraph
Since 1st March, 1999
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Bush stands firm for outsourcing

Washington, March 10: Notwithstanding his declining ratings in opinion polls on the issue of job losses, President George W. Bush is standing firm against those who want to legislate and adopt other measures against outsourcing and globalisation. At least so far.

In his strongest remarks yet against Democratic challenger, John Kerry, and several Democrats who have moved bills on Capitol Hill to stop outsourcing, Bush said yesterday: “There are economic isolationists in our country who believe we should separate ourselves from the rest of the world by raising up barriers and closing off markets. They’re wrong.”

Speaking at a national awards ceremony on the outskirts of the capital, the President said: “If we are to continue growing this economy and creating new jobs, America must remain confident and strong about our ability to trade in the world.”

Kerry immediately responded to the President’s defence of globalisation by saying: “It is what I would call stubborn leadership because he (Bush) stubbornly insists on tax cuts as he steadily loses jobs in this country. I think his stubborn leadership has led America steadily in the wrong direction.”

The spat over offshoring American jobs and the competing economic models between America's incumbent President and the potential president comes at a time when Indian companies which operate large call centres and Indian information technology industry representatives are preparing to mount a staunch defence of outsourcing.

Next week, Kiran Karnik, president of NASSCOM, will make a presentation before some of the most influential Americans in New York on the “myths and realities of outsourcing”.

It is likely to be part of a larger tour of the US by Karnik to expose the “myth that outsourcing means that India’s information technology prowess is directed only at getting work from abroad”.

Around the same time, top executives from Infosys will be in New York and are expected to receive a lot of brickbats while batting for India on the issue.

Infosys, which is well-known to Americans now as a pioneer in the outsourcing business, was at the receiving end of the rising tide of anger in the US over job losses last week when authorities in California denied the company a level playing field by rejecting its request to file tax returns using a specific method allowed by California’s tax code.

That route would have reduced the tax liability of Infosys to $180,505 during the last two years, compared with $1.3 million for which it has been assessed.

Tax officials in the state conceded that several international firms have done what Infosys sought to do and reduce tax dues, but insisted that such exemptions are rarely given.

What is clear from the dispute is that in the present emotionally charged atmosphere over outsourcing, Indian information technology firms will find the going tough.

The dispute has spilled over from bureaucratic cubicles to the public domain with the director of the California Tax Reform Association, Lenny Goldberg, telling the local media that Infosys is “asking for a tax break on the grounds their payroll costs one-ninth in India . It takes a lot of nerve to ask that, considering the context in which they operate.”

Tasting populist blood, politicians have also taken sides in the dispute. A state Senator, Jospeh Dunn, told the local media that “Infosys represents the extreme of the outsourcing problem They not only want to steal California jobs, they would also steal the taxpayers’ dollars. That is unfair not only to California workers, but to businesses as well.”

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