India's IT Sector Nervous as US Proposes Outsourcing Tax (reuters.com) 82
India's massive IT sector faces a lengthy period of uncertainty with customers delaying or re-negotiating contracts while the U.S. debates a proposed 25% tax on American firms using foreign outsourcing services, analysts and lawyers told Reuters. From a report: The sector is likely to be on the receiving end of a bill which, though unlikely to pass in its nascent form, will initiate a gradual shift in how big-name firms in the world's largest outsourcing market buy IT services, they said. Still, with U.S. firms having to pay the tax, those heavily reliant on overseas IT services are likely to push back, setting the stage for extensive lobbying and legal battles, analysts and lawyers said.
India's $283 billion information technology sector has thrived for more than three decades exporting software services, with prominent clients including Apple, American Express, Cisco, Citigroup, FedEx and Home Depot. It has grown to make up over 7% of GDP. However, it has also drawn criticism in customer countries over job loss to lower-cost workers in India. Last week, U.S. Republican Senator Bernie Moreno introduced the HIRE Act, which proposes taxing companies that hire foreign workers over Americans, with the tax revenue used for U.S. workforce development.
India's $283 billion information technology sector has thrived for more than three decades exporting software services, with prominent clients including Apple, American Express, Cisco, Citigroup, FedEx and Home Depot. It has grown to make up over 7% of GDP. However, it has also drawn criticism in customer countries over job loss to lower-cost workers in India. Last week, U.S. Republican Senator Bernie Moreno introduced the HIRE Act, which proposes taxing companies that hire foreign workers over Americans, with the tax revenue used for U.S. workforce development.
Please pass this!!! (Score:3, Insightful)
Let's keep the jobs here friends..eh?
I for one would be thrilled to hear a customer service phone call answered without an accent so thick I need my iPhone translate listening on the other line to let me know what the fuck is being said on the other end...
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I agree with you. Me and my fellow unemployed team members from my last gig (only 1 out of 7 has found a job since early April) would gladly put our misguided hopes and dreams for some relief.
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Who said anything about increasing employment? It just means you call tech support and instead of someone answering in 5 minutes to handle your call, you'll be on the phone for days. You might ask why don't they hire more people? Well, I'm sure they can, work from home, $3.25/hr (which is the federal minimum wage?). I'm sure you'll be helped by Cletus who can even barely read the script.
And part and parcel of the whole "no overtime tax", well, they will likely scrap overtime pay for everyone, so your IT wor
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massive untaxed trade imbalance between us and the US regarding digital goods and services
Digital goods, like services, are difficult to track across borders. Perhaps the best solution would be to overhaul our tax and tariff system. Delete all taxes on profits and capital gains. Replace them with a flat revenue tax (set to a revenue neutral level as best as possible). With only one deduction allowed: W-2 wages paid.
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I would do the opposite on taxes... delete all corporate taxes. In the end, corporations are groups of people who get together, earn some money and divvy it up. Tax the money when it arrives in individuals' bank accounts, be it from capital gains, salary, bribes (ok, possibly hard to trace), whatever. The tax should be progressive but without regard to the source (now there is a different rate on capital gains, for example). Tax rates on individuals would need to rise to compensate for loss of business taxe
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I think corporate income taxes should just be abolished because they're largely pointless. The profit they make either gets reinvested or given out to sh
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That's a bad idea and all it should take is the realization that most grocery chains have a massive revenue but very thin profit margins.
But think of those profit margins when the (labor intensive) upstream food production processes costs go down (deductible wages) and they can pass that savings on to the grocery stores.
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What Canadian and EU companies are outsourcing IT support to the USA????
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Be careful what you wish for. This is something that Canada and the EU might want to return in kind, because the massive untaxed trade imbalance between us and the US regarding digital goods and services has been a thorn in our governments' side for a good while now.
Go ahead. Tax your DOMESTIC BUSINESSES who use foreign digital goods and services. Just don't try and tax US BUSINESSES for providing them to you. In the end, it may harm both economies either way, but one is overreach and the other is not.
How you do a thing matters as much as the goal -the ends do not justify the means. A lesson I wish our current overlords would learn.
Re: Please pass this!!! (Score:2)
Luckily, all big US businesses have a shell company in Ireland, for US tax reasons, so the EU can consider these as local and tax them accordingly.
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Yes. They signed up for being regulated as EU businesses when they decided they wanted to evade paying US taxes by putting all of their European transactions under their Irish shell company. Of course, that means that they are NOT foreign digital goods and service providers to EU businesses -they are European digital goods and service providers.
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Be careful what you wish for. This is something that Canada and the EU might want to return in kind, because the massive untaxed trade imbalance between us and the US regarding digital goods and services has been a thorn in our governments' side for a good while now.
Is this a concern? This is a bill targeted at India because most of the imported IT and BPM services come from India and not from Canada and the EU. India dominates contract services due to its low labor cost. Canada and the EU do not have this cost advantage and therefore have very small portions of the global market.
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One time back in the '10s I called Apple for something at about 5PM Austin time. It got answered by someone in Ireland. My mind was blown, both because I think Apple had recently opened a call center in Austin, and because that meant it was almost midnight at the call center.
Anyhow, it's about time they figured out a way to "tariff" off-shored non-manufacturing jobs.
Re: Please pass this!!! (Score:2)
It really is kind of insane for a service based economy to outsource services and labor as a first resort.
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Why? It's completely rational from the companies' point of view. Workers in India will be paid much, much less than workers in the USA.
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I agree with you entirely except the 'only people' part.
They macro trends work or at least will ultimately work as you describe but in any economic reorganization you are going have some groups that make gains and others that fall behind. There is a segment of the population that I suspect isn't really trying to exploit the wage gap so to speak but also isn't sure their corner of the labor market is as impacted by foreign participants or trade as others. They rightly wonder if they are going to experience i
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Be very careful what you wish for. It might look good on the surface, but I think would absolutely destroy American companies' ability to compete internationally unless it is very narrowly defined (and if it is narrowly defined, it won't have much of an impact).
What exactly counts as "offshoring"? All global companies set up subsidiaries abroad which are technically separate companies in just about every country they operate in and basically have contracts with the parent company. Do all these get taxed? Co
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Well... if Mastercard has it's corporate office on US soil, and I call about an issue, that call should be handled by someone on US soil (where they pay the US minimum wage for a call center)... so, they'll just move corporate office to India, then send cards to Americans from some card maker on US soil, and they should get tariffed or taxed for all the money that gets sent to corporate in India.
Considering the jobs report was almost a million below what was initially reported, maybe if some of these jobs w
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The firms won't need to use a foreign outsourcing service. They can just open a branch in that country and hire the labor. Still cheaper than using Americans. If anything this will just hurt small/mid sized businesses that can't afford to do that. That said. I'm still in support.
Re: Please pass this!!! (Score:2)
The firms won't need to use a foreign outsourcing service. They can just open a branch in that country and hire the labor. Still cheaper than using Americans.
That's a distinction without a difference.
If a U.S. company directly hires Indian workers in India, the vast amount of money spent on wages is still winding up in the Indian economy.
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Exactly, but it isn't outsourcing. How do you solve this issue? Many companies are multi-national. Do you tax their foriegn labor? How does that help anyone?
I want to see more American jobs, but I also don't see how to pull this off. It's like the old "I know how to stop spam email" meme.
Re: Please pass this!!! (Score:4, Interesting)
I'm pretty sure this is really a negotiating tactic to force India's hand on other issues, like buying Russian arms and oil. India buys most of its oil from Russia, and that money is directly funding Putin's war in the Ukraine (that's why many other countries won't buy Russian oil, remember?).
Trump wants India to stop funding Putin's war, maybe threatening one of their economy's biggest sources of revenue will get their attention...
I think you're correct (Score:2)
I cannot imagine a world where we significantly punish corporations for outsourcing. That's just not how things work.
We haven't quite supplanted our government with corporate rule but we're not far off. One more bad election I think and it's over.
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In a dystopian future, Indians ring a call center and speak to a minimum wage employee with a US accent so thicc no one can understand them.
How the turntables.
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Wow..one of he first bills I would think most EVERY American could get behind.....
Let's keep the jobs here friends..eh?
In contrast to the attempt to rehome lost manufacturing factories, trying to rehome lost overseas contract services is something that can be much more practical. Factories need supply chains that cannot be rebuilt overnight, and they need workers willing to do the hard physical labor. Contract services are different because they require offices and office equipment that can be provisioned very quickly. And there are a lot more Americans who are willing and wanting to fill these office jobs.
The key and ar
As a Proud American DevOps/Techie of 25y of India (Score:1)
. .. who voted for Trump ((mainly as a shield against Islamic terroristic attacks in India (Mumbai, Kashmir, NYC, and worldwide)).
I support this bill.
However, keep in mind that Globalization was America's failed experiment (from an American viewpoint).
- fuelled by end-stage Over Capitalistic Greed.
https://books.google.com/books... [google.com]
Re: As a Proud American DevOps/Techie of 25y of . (Score:1)
... Indian/Hindu origin...
(fixed truncated subject).
Re: As a Proud American DevOps/Techie of 25y of (Score:1)
Fixing hyperlink
https://books.google.com/books... [google.com]
As for the accent, I can't properly... (Score:1)
... understand what the Irish are saying either.
https://m.youtube.com/watch?v=... [youtube.com] the IT Crowd
Good (Score:5, Insightful)
I'm tired of dealing with substandard IT services, from both India AND China. The language barrier is one thing, but I don't think I've ever spoke or worked with an agent from either country that could do anything other than read from a script. Once the problem deviates from the script they were useless.
Granted; US support is a mixed bag. Sometimes it's great, sometimes it sucks, but at least sometimes it IS great. That's not something I've ever experienced with Indian or Chinese support.
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In my experience they will do anything to prevent escalating a call/chat, and when they do, the next guy is only better about 50% of the time.
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Most call centers disincentivize escalating issues. They do this through official policy (escalated calls count negatively on an agent's metrics) and culturally (agents who escalate issues are berated as not taking ownership of the issue, not wanting to work, creating extra work for superiors, etc.)
Forcing you through the troubleshooting steps is the least-problematic way for that issue to manifest. It is the level 1 agent doing CYA so he won't be accused of cutting corners. The more problematic way for it
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Och aye!
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ELEVEN!!!! [youtube.com]
Re: Good (Score:1)
As a proud American DevOps/techie of Indian/Hindu origin 25y here in the US
I need Closed Captions for this fantastic show with exaggerated Irish/British accents
https://m.youtube.com/watch?v=... [youtube.com]
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Some of the at is cultural, some is education but a lot of it just selection bias I expect.
Most companies are going to outsource their first and second lines of support not the stuff that requires technical ability and deep knowledge about systems or decision making authority to resolve. Not that you can't or that some don't but the simple-er basic customer service tasks are obviously the easiest thing to throw over the wall to some third party.
My point is frustrating as it is, I don't think agents are to b
Re:Good (Score:4, Insightful)
Instead, you will just get substandard IT services from genuine US employees :)
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The support that is bad now will not get better when it goes to the US. Some support is good because the ones paying for it want it it be good, not because of from where it is provided.
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Lately I've discovered that I can't understand the English even of US-based support, usually because they are immigrants with poor language skill, or because they speak in a heavily accented dialect. When I can understand them, it then usually turns out they are Dunning-Kruger sufferers. This is part of the convergence between AI and HI. In fact, ironically, it's frequently easier to get an LLM to "understand" what I am asking than one of these alleged humans.
Closing the barn door afterward (Score:2)
Seems like this is a bit on the too-little, too-late side. Offshoring has been occurring for so long that the divisions set up in other countries are mature now. They're able to locally train local staff, not only for providing international support, but for providing local/regional support within their own countries or economic trade zones.
CORRECT Re:Closing the barn door afterward (Score:3)
Seems like this is a bit on the too-little, too-late side. Offshoring has been occurring for so long that the divisions set up in other countries are mature now. They're able to locally train local staff, not only for providing international support, but for providing local/regional support within their own countries or economic trade zones.
This is correct.
This will NOT bring back very many outsourced jobs.
Do some research on multinational corporations and you'll see they have optimized the inputs and outputs for each region.
Multinational corporations, particularly those in the virtual product software sector, exemplify sophisticated optimization strategies across diverse regional markets. By meticulously analyzing regional inputs and outputs, these companies maximize efficiency and profitability. Particularly, software tech companies, unburde
Onshoring call centers. (Score:3)
Cannot happen soon enough. I recently dealt with insurance issues that had the paperwork in the US and the bad scans thereof in the Phillipines. The two locations claimed they could not contact each other. That took a month to resolve.
What's good for the goose (Score:3)
It's interesting how the conversation is so one sided.
Trump threatens action against countries that propose similar actions about cloud and other tech but the rest of the world should just sit back and take it when it affects the US?
Life is going to get expensive for the US.
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Yes, and that is why countries are repatriating IT and cloud away from the US. So US is repatriating low paying telephone support jobs while the other countries are repatriating high paying engineering jobs.
Smart. Like I said, it's going to get more expensive.
Re: What's good for the goose (Score:2)
It's a negotiating tactic to get India to lower their tariffs and buy less Russian oil...
This issue didn't just arise out of nowhere... look at what U.S. and Indian governments are negotiating right now.
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Russia asked NATO to stop it's eastward expansion to Russia's borders. NATO didn't give a shit. Russia then asked Ukraine to amend its constitution to add a clause so that it won't ever be able to join NATO. Ukraine didn't heed. If US really means peace, it was already on the table. Oh but how can wars stop? It's a very big industry in the US. It's too big for peace.
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Life is going to get expensive for the US.
And, since we're not that smart, we'll just keep voting for the worst possible candidate - as long as they piss off half of the country - and make things worse. Yay.
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It's interesting how the conversation is so one sided.
Trump threatens action against countries that propose similar actions about cloud and other tech but the rest of the world should just sit back and take it when it affects the US?
Life is going to get expensive for the US.
It already is, the soy farmers in the midwest are already asking for handouts because China has stopped buying their product.
The power of the US has waned and it's now dropping to the point where it's not just the EU that can say no... it's not even just the EU and China any more. You've got Trump to blame for most of it.
What about American technology firms.. (Score:1)
Re: What about American technology firms.. (Score:3)
IBM is a global corporation, it makes perfect sense to have more workers outside the U.S. than inside it.
If nothing else, it helps them avoid paying taxes on foreign revenue when they don't bring the money into the U.S., but keep it inside the countries the money is earned in to pay workers in those countries. Bringing that revenue into America exposes it to US taxes on top of foreign taxes.
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Won't be losing sleep (Score:2)
Good (Score:2)
AI will kill the outsourcing first (Score:2)
Corporations are always looking to lower costs. Outsourcing to India was a win for them.
However, corporations now have an even cheaper, more convenient way to reduce support costs.
I expect that AI will take over and end up killing outsourcing as well as US jobs.
We can all then sit back and relax without the grind of daily work. We just need the welfare state to ramp up so we don't starve.
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Yep... better ramp up work on a UBI of some sort, unless you want to be responsible for eradicating all your voters.
I misread the title: let's outsource paying tax (Score:2)
At first glance, I read it as the USA was planning to export the paying of taxes to India. I don't know why India would agree to paying my income tax, but, I'm all for it, haha
Easy workaround for companies (Score:5, Interesting)
This proposal taxes employment via outsourcing services. Many companies have already switched to a different model: A wholly-owned subsidiary headquartered in India or Pakistan or wherever they want to hire. In other words, cutting out the middle man. My company of 800 employees already uses this approach. For large companies who are heavy outsourcing users, this approach isn't that hard to pull off, and will avoid the tax.
So the main people worried, are the big outsource companies. It won't necessarily mean less offshore labor for US firms.
Re: Easy workaround for companies (Score:2)
Great idea but then companies would be accountable (Score:2)
Good luck closing all those loopholes.
\o/ (Score:1)
Part of a family of changes intended to destroy the US economically?
A big FU to the financial equivalent of Second Law of Thermodynamics.
This would stop (Score:2)
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It's very very easy to circumvent (Score:2)
US companies will float other holding companies and incorporate them in Cayman Islands. These holding companies will inturn outsource the same stuff to India or China. It will be very difficult to stop or control outsourcing of services. They travel through undersea cables. Not through US customs.