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'Outsourcing biggest concern for India'

india Updated: Nov 16, 2008 14:51 IST

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Outsourcing by US companies will be the biggest concern for India due to the change in US administration next year, says a global research firm.

"For India, the biggest concerns perhaps in over its important outsourcing industry, as the practice of shifting jobs overseas had come under fire during the US presidential campaign," Moody's economy.Com, a subsidiary of global research firm Moody's Corporation, has said in a report.

In February this year, continuing to play the anti-outsourcing card, Obama, the then Democrat presidential front-runner, had said, while America cannot "shy away" from globalisation, it would have to take measures to ensure that jobs are not shipped overseas.

"We have to stop providing tax breaks for companies that are shipping jobs overseas and give those tax breaks to companies that are investing here in the United States of America," Obama had said during a debate with rival Senator Hillary Clinton in Cleveland, Ohio.

However, Planning Commission Deputy Chairman Montek Singh Ahluwalia said on Saturday that the US has given an assurance to India that the policies to strengthen bilateral ties will continue and felt that outsourcing, a hot topic during the US presidential polls, will not be an issue.

"They (US) assured us that the new Administration would continue to strengthen the relations between the two countries," Ahluwalia told reporters on his meeting with former Secretary of State Madeline Albright, deputed by President-elect Barack Obama to meet world leaders currently in Washington for the G-20 summit.

The research firm added, India's outsourcing business depends on robust service industries in advanced economies, most of which are battling recession.

The apex body of Indian software and services companies, Nasscom, has expressed cautious optimism on working out mutually beneficial policies to boost the economies of both the countries after Obama won the presidential election.

The 40-billion-dollar software and BPO export industry, mainly driven by outsourcing, draws 60 per cent of its revenues from the US.

India Inc has long maintained that outsourcing has resulted in savings for the US economy.