Wednesday, May 6, 2009

From Buffalo to Bangalore

This was my first title for this blog, as it was catchy, but I thought that purists would argue that I'm not really from Buffalo -- Niagara Falls, where I grew up, is close, but not technically Buffalo -- so I searched for a different names. But the papers here today are full of Buffalo following Obama's statement about how the tax code should encourage creating jobs in Buffalo rather than in Bangalore. The NYTimes article today "Obama's Plan on Corporate Taxes Unnverves the Indian Outsourcing Industry" doesn't really capture the hysteria about this topic here, nor the range of opinions about the proposed changes' effects -- from disaster to irrelevant to positive. Here are some of the headlines from major papers: "Barack beats up Bangalore again," "All is still well, says Indian IT," "Research work will be unaffected," "Outsourcing will prove 50% dearer for US cos," "Advantage for desi IT cos," all from The Times of India; "Tax break will get us more work" (with a subtitle of "b'lore vs buffalo"), "Grass is green in BUFFALO, not Bangalore, says Obama" (yes, with Buff in all caps), "America Inc to fight Obama tax plan tooth and nail," and "It will hurt them, not us," from DNA; "Obama's tax prposal to hit US firms rather than Indian IT sector," in The Business Standard; and "Obama's tax measure: "a retrograde step"," "Nasscom downplays move" (Nasscom is the IT industry association here: the National Association of Software and Service Companies), and "Obama ends tax sops to outsourcing firms" in The Hindu. I'm not bothering to link to the articles as I've had bad luck with the URLs of articles here changing, and access to them disappearing quickly, but interested readers probably could find them.

I don't have time to give this proper attention, but a few quick points:
--There seems to be little understanding that Pres Obama is proposing something that is likely to get changed (although some of the more sophisticated analysis does mention this);
--The all important details are generally not provided. From what I can tell, they are probably not even available in Washington;
--the hypocrisy of folks saying this is protectionist and anti-WTO when Indian industry continues to be as protected as much as or more than most any other serious economy is hard to escape;
--I have found not one mention of the fact that TCS has an office in Buffalo! This is indicative of reporters not being aware of the dots to connect, let alone able to connect them;
--while I believe that Pres Obama is using Bangalore as a metaphor for all competitive global cities, the folks here, understandably I guess, take it very personally. But they are saying, "Okay, so what can we do to make ourselves more competitive?" but they take their position of the last few years for granted. In fact, I think that the dynamics of the market before this announcement were or should be more worrisome to them. Most of the IT firms haven't been viewing India as a potential market, while the US firms are now, partly because the margins are lower, and the profits have been so easy to get internationally. Now that the intl opportunities are not as numerous for anyone, India looks like a good market for foreign firms as well as Indian.

Much more to say, but need to go make dinner. Hopefully I will get back to this tonight ....

1 comment:

Mick said...

Hi Robin!
Very interesting...reading this up in Niagara Falls. How funny that you had "From Buffalo to Bangalore" as your blog title. I thought of you when I first heard Obama's Buffalo/Bangalore statements, so it's nice to see your perspective on this.
Best regards,
Mike Streibig