IT industry worried about US 'protectionism'

Software firms association Nasscom on Thursday sought to downplay US President Barack Obama's decision to slash tax breaks for companies shipping jobs abroad, saying the real worry is "protectionism" and not tax breaks.

"I think the concerns that we have is about indirect protectionism. I don't think tax break issue is really the one which is important for us. Obama's comment was not related to outsourcing. It's about US companies operating in regions where they get tax benefits," Nasscom VP Ameet Nivsarker told PTI.

In his first State of Union address, Obama said, "To encourage...businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America.

"...People are out of work. They're hurting. They need our help...," Obama said.

Nivsarkar said that the move will hit American companies more than India's $60-billion IT and outsourcing industry, which earns over half of its revenue from the US.

"The whole issue about taxing companies, which were shipping jobs overseas and taking away tax breaks actually does not relate to the work that is done out of India or other locations. That is really about US subsidiaries which have set up plants overseas," he added.

Obama's remarks seemed to have no impact on IT stocks.