The US President, Mr Barack Obama’s decision not to give tax breaks to US companies which outsource jobs will adversely affect around 200 firms in the state.
Across the country, around 1,000 firms in various sectors including IT and pharma will be in trouble.
“Around 90 per cent of the BPO companies in Andhra Pradesh are dependent on the US,” said CS.Rao, IT advisor to the state government. “Definitely Obama’s decision will have a major impact.”
There are around four lakh persons working in BPO firms in the state and it was expected to cross five lakh by next year. But now with this US decision, job losses are imminent. It will also lead to a revenue slump in the state, particularly in the ITES sector.
“Major firms would survive the tax burden but it would be tough for smaller firms,” said an official at the Software Technology Park of Hyderabad. “It will affect 30 per cent of the BPO industry and create layoffs.” A spokesperson of Satyam BPO services said the impact could not be ascertained at present.
Experts said Mr Obama’s decision was against the guidelines of World Trade Organisation. They wanted the Indian government to approach the WTO for remedial measures.
“It spells trouble for Hyderabad-based firms which are already reeling under slowdown,” said Mr S. P. Agarwal, president of the Federation of Andhra Pradesh Chambers of Commerce and Industry.
