Is offshoring poised for slow death? – II

Since I have written the post “Is offshoring poised for slow death?”, President Obama made budget speech in the joint session of US congress on ending tax breaks for corporations that ship jobs to offshore. This is apparently keeping in line with Obama’s long standing promise from his campaign days to help encourage local job creation and to improve the negative public sentiments in the US.

Some of my friends and I was discussing the impact of this “taxing offshore” policy few days back. Some were of the opinion that it is more “taxing” for the manufacturing sector and since China is exporting most of the manufacturing goods it would be the most affected. Some were of the opinion that the “taxing” is same for both service industry and manufacturing industry and Indian IT service providers would see the same impact as well.

Here is my take on this:

  • While the broad policy statement is made, the exact structuring and modality of the tax is not yet worked out
  • At a broad level, it seems to be negative for IT offshoring. The quantification of the negativity can be ascertained only after the detailed policies evolve
  • I am hoping that this policy would not be too restictive and deprive corporations of having choices in efficient sourcing
  • Americans and American corporations are one of the most globalized. Most of the American corporates global source goods/services in one form or the others. The global sourcing is prevalent from the small mom and pop stores to burger joints to retail giants to Oil companies to IT behemoths. I am not sure how this policy would be strutcured so as not to create side effects to the US economy in the process.

I am no economist. There are many questions than answers at this stage and it is better to wait and watch for further clarity.


1 Response to “Is offshoring poised for slow death? – II”

  1. 1 Lou March 10, 2009 at 7:23 pm


    There is a book that deals with the offshoring and outsourcing of services. You may find the content relevant to your discussion on “Is offshoring poised for slow death?”

    The website noted above is linked to the book. Best of luck to you. These are very interesting times in which we live … and work!

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