In the first signs of jobs moving out of India, TCS has opened a new development centre in Cincinnati, Ohio. Facing pressures in the form of increasing wage hikes and non-extension of the tax breaks to software technology parks, client demands of a delivery centre close to their locations have prompted TCS to set up a software development centre in Ohio.
TCS plans to hire 1,000 employees from different universities like the University of Phoenix. Infosys, Wipro and HCL have similar development centres in the US. This development centre will do application development, maintenance, IT hardware and software maintenance and backoffice related work for clients based out of North America.
The company has got incentives worth more than $19 million for investment in Clermont County, including a 90 per cent, eight-year Ohio job creation tax credit, valued at more than $15 million for work done out of that development centre.
Another reason for opening a development centre in Ohio is that it is home to seven of the Fortune 10 companies in the manufacturing, retail and financial services sectors.
Industry watchers say increasing wage costs, which have gone up 15 per cent on average last year, and non-extension of the tax holiday combined with uncertainty over H1-B visas are making Indian companies look at setting up development centres abroad. In 1999, the government had granted a 10-year tax holiday to IT companies located in software technology parks all over India. The government has not extended this tax holiday, which expires next year.
“We also see additional advantages such as cultural affinity, legal, security considerations, and handling of sensitive data,” N Chandrasekaran, TCS' chief operating officer and executive director said.