With the fear of anti-outsourcing rhetoric taking centre stage ahead of the US presidential elections this year, Nasscom, the Indian information technology industry body, has issued a report that its member-companies support a little over 280,000 jobs in America, which is battling high unemployment.
The report, titled ‘India’s tech Industry in the US’, highlights the general and specific contributions by the Indian IT industry to the US economy in terms of job creation and developing roots at the community level.
While the overall US unemployment rate has been growing, the report states direct employment by Indian IT firms in the US has almost doubled in the past five years, to 107,000. Joblessness in the US, showed the latest available data in February 2012, was 8.3 per cent, down from the 9.9 per cent in January last year.
According to the Nasscom report, the Indian IT sector supports 280,000 jobs in the US, which includes direct and indirect employment. Most of these indirect jobs span various sectors and are at every level in that economy. “This (the release of the report) is part of our endeavour to quantify the trends and benefits behind the significant investments India-based IT and BPO (business process outsourcing) firms are making in the US,” said Nasscom president Som Mittal. “The next phase of this partnership will see a continuation and vast expansion of the investments both nations are making in the other. We look forward to a greater engagement in the future, working closely with US companies to build their growth.
The report has come at a time when the US is bracing for a presidential election, in November this year. During his State of the Union speech this January, President Barack Obama raised concerns on outsourcing by appealing to US firms to bring jobs back home. There are also reports that various US states are proposing legislation that would make American companies that outsource their call centre work ineligible for guaranteed federal loans and grants for five years.
The $70-billion Indian IT industry derives a majority of its business from the US market. However, factors such as the economic slowdown, stricter norms for getting visas and increasing anti-outsourcing protests in the US have been pushing Indian companies to expand in other places.
Still, most Indian companies have increased their campus recruitment efforts in recent years in the US and are planning to increase the number of offers made by up to four times in the next two years.
The Nasscom report says Indian IT companies have increased their investments in US local centres by increasing the number of seats (jobs) nearly 10 times in the last five years. The total of seats is expected to grow 50 per cent in the next five years.
California, Texas, New Jersey, Illinois, Michigan and New York account for half the direct employment supported by the industry.
Besides creating jobs, the report says Indian IT industry has paid $15 billion in taxes to the US treasury in the past five years, helping the economy come out of recession. Other than taxes, Indian IT has also invested a little over $5 bn through 128 acquisitions. The growth in acquisitions by Indian companies in the US increased to 54 per cent in 2009-10 from 41 per cent in 2008-09.
The industry has also made commitments to the US economy by setting up innovation centres to drive next-generation technology development. Besides, Indian IT industry has made significant investments to develop deep roots in American society, it says. Its estimate is of touching half a million American lives.
