Barack Obama's victory may not be good for Indian IT services industry

Barack Obama's victory in the US presidential elections is likely to make many Indian IT services companies edgy. The president has been a proponent of protectionism and has time and again reiterated his opposition to outsourcing.

"This is not the best news for India or the IT outsourcing industry," said Phaneesh Murthy, CEO of iGATE. "However, we need to understand how much of the election rhetoric continues into 2013 - that will determine the full implication for us. The concern over the deficit and jobs will continue and, in my mind, force sluggishness to remain in the economy."

Members of the Indian IT industry's lobby, the National Association of Software and Services Companies (Nasscom), are playing down the impact.

Sharad Sharma, Chair of the body's product forum, says he is not sure about the implications of Obama's second term for the country's cost-leverage model.

"However, it is positive for India's software product industry. Obama is a big supporter of start-ups. There could be more capital available to Indians because capital movement cannot be geographically restricted," he told Business Today.

Growing protectionism during Obama's first term as president has forced Indian IT companies to hire more in the US - something that narrows the fat operating margins they have historically enjoyed on contracts. An employee in the US is three times more costly than an employee in India.