The US state of Ohio has strictly enforced a ban on government projects from being serviced out of offshore locations.
Does that matter?
If Ohio is unwelcome, there are Oklahoma, Minnesota, Florida and other provinces peppered across the US that can continue to fuel growth in India's software service companies, say industry executives.
As worried IT firms went back to the drawing boards to redraft their growth strategies, experts said it could well make greater economic sense to set up technology parks in smaller cities within the US.
This would ensure that work is not "off-shored," or moved to a foreign locations – something that hurts American jobs — and also make them eligible for US government projects.
An anti-outsourcing campaign is gathering political steam ahead of US Senate elections in November.
"In the best case an IT company can save close to around 40 to 45 per cent costs through offshoring. But if they set up campuses in smaller cities in the US, they could still enjoy tax breaks, qualify for government projects and create job opportunities locally," Avinash Vashishtha, CEO of offshore service advisory firm Tholons, told HT.
In the final analysis this would help offset costs—economic as well as political, Vashistha said.
In fact, Indian firms could be creating jobs in the US. Experts expect Indian IT firms to ramp up their capacities there in the coming years.
HCL Technologies, which currently works with numerous state and local government agencies in the US, said its projects are managed and staffed almost exclusively through local service delivery centres located Raleigh, North Carolina and New Jersey.
"HCL has been increasingly creating domestic delivery capabilities in the US," the company said.
Many of HCL Tech's peers have also executed similar strategies.
Wipro has invested in expanding presence there through partnerships with States like Georgia where it has built a development centre.
Tata Consultancy Services, the country's largest software exporter, and Number Two player Infosys also have service centres in the US. Infosys has a consulting unit that employs dozens of consultants.