Wednesday, May 6, 2009

Obama sings the 'Bangalore' jingle again

By: Subhadeep Bhattacharjee

What does the President of the world's greatest superpower do after completing 100 days in office. Well looks back at his election campaign promise and hums the same tunes which brought him to the White House. In an expected move US President Barack Obama promised lesser tax rates for companies which create more jobs in the US than outsource it to countries like India.

In a White House event attended by many industry leaders Barack Obama said “It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.” Bangalore is no longer a city it has become a metaphor. The growth that this city has seen in the last two decades is good enough to make a person in Manhattan jealous.

Barack Obama might have created history by becoming the first black President of America but he seems to have forgotten the biggest idea around which his nation is built CAPITALISM. American companies know the profit and loss theory better than anybody in the world and that is why they are biggest economy on the world. They have been smart when it came to acquiring offshore business and smarter when it came to dumping such businesses.

Business is driven by logic and not by emotion and more so in a capitalist country like the US. Obama might want US industry giants to believe in his election promise but there will be very few takers. Many MNCs like the GE, IBM and Citi Group employ a large number people in India. These companies get quality labour at a fraction of the cost which they would have spend employing people in Buffalo as Obama wants them to.

What this Harvard law graduate doesn't seem to aware of is Bangalore without tax intensives is still far cheaper than Buffalo. No mater what is the percentage of tax he levies on MNCs outsourcing jobs to India it will still be cheaper than running operations in Buffalo. Secondly American MNCs never came to India to do charity a thing which is least expected of a country where hiring and firing are the two sides of the same coins.

Obama's speech may bring some relief to an unemployed person in California and sound like a victory speech but it is unlikely to have any major impact on the outsourcing. The reaction of the India Inc. on the issue has shown that Obama's Bangalore to Buffalo call is unlikely to sound alarm bells in Bangalore or any center of outsourcing in India.


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