Outsourcing Tech Jobs to India May Get More Expensive if New US Bill Becomes Law
The Wire Staff
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New Delhi: Outsourcing tech jobs to India may get more expensive for American companies if a Bill introduced last week in the US senate becomes law.
Republican senator Bernie Moreno introduced the ‘The Halting International Relocation of Employment Act’ Bill in the US senate on Saturday. The Bill aims to exact 25% in taxes from American firms that have employees overseas, the Economic Times reported.
The move came after US trade advisor Peter Navarro last week advocated the idea of imposing tariffs on all foreign remote workers on social media platform X. This is the first instance of the services industry coming up in the US tariff discourse.
The Bill would have a direct impact on Indian IT services, as US clients account for over 60% of India’s IT outsourcing revenues. The Bill, if enacted, would nullify the cost advantage US companies have in outsourcing jobs to India.
The US is also India’s top export destination with a chunk of the trade surplus between the two countries dominated by IT and software services worth around $7 billion.
India’s IT stocks took a hit earlier this week with Nifty IT and BSE IT index declining by 1% at the end of Monday.
According to the report, the move could also impact global capability centres (GCCs), which are wholly-owned offshore tech centres of multinational companies, mostly American. While they don’t function on a vendor-client billing model, any legislation aimed at taxing relocation of jobs could have overreaching effects on any such arrangement, the report said.
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