Mumbai: In what could be a major setback to the 100 billion dollar Indian IT industry that thrives on offshore revenues, the US on Wednesday proposed two deals with a mandatory 'no-offshore' clause.
It has been learnt that of the two deals, the first is a 320 million dollar deal in the insurance sector, for which Infosys and IBM are likely front-runners.
The second is said to be a 400 million dollar deal in the regulatory space and is likely to be closed within this month. Sources add that a few similar deals could be on the anvil.
Almost all IT vendors including TCS, Wipro, Infosys and HCL Tech have increased their onshore footprint and expanded their employee base in onshore locations, especially the US, and industry veterans say, companies will just have to make their peace with the changes.
KV Kamath, the Non-Executive Chairman of Infosys and Chairman of the ICICI bank, said, "We will need to look at this carefully and understand if it is implementable. If it is implementable then we need to see the consequences of that on business and strategy and position ourselves for that. I think it's best for Indian IT business to be proactive on this to understand its implications."
Meanwhile, the US Senate will soon be looking into a bill backed by the Democratic Party, popularly called the 'Bring Jobs Home Act'.
If passed, the law will extend tax benefits to companies that shift their work back to the US and will end tax incentives to those sending work offshore.
This is not the first time politicians in the US have tried to push through what are seen as protectionist measures, but with the presidential elections slated for later this year, the fear is this may not just remain a rhetoric.