Obama's Tax proposals may heat US companies in long term

After US President Obama said that he will change the taxation for corporates soon has triggered many reactions in US and worldwide.

Consequences of such a policy which has implications across various countries and sectors can be unimaginable. Its complexity and implications may be much larger than we are thinking it now.

Its also said that it may be so that it may make US companies not very competitive in future.

Some predictions / market sentiments / experts opinion is like this..
1) It may affect US based companies like Dell IBM HP etc
2) Currently these large US companies earn more than 50% of their revenue from operations outside US
3) Its beleived more to close loopholes of taxation system than ban on outsourcing
4) Currently US companies are not taxed for profits earned outside of US unless they bring this money back to US. Now the sentiment is to tax the companies on profits outside US. This will mean that the money will be taxed immediately, rather currently when these companies get money back on long term. Hence they will be paying in chunks and yearly.
Supposedly this may lead to $210 billion for US govt.


'The current proposal, as we understand, is to close corporate tax loopholes for US multinational corporations. We do not believe it has anything to do with IT outsourcing done by US corporations, - Infosys reaction

Say no to Bangalore, yes to Buffalo: Obama

Say no to Bangalore and yes to Buffalo,' seems to be the latest mantra of United States President Barack Obama as he struggles to bring the ailing American economy back on track.

Instead, the incentives would now go to those creating jobs inside the US, in places like the Buffalo city -- bordering Canada in upstate New York.

"We will stop letting American companies that create jobs overseas take deductions on their expenses when they do not pay any American taxes on their profits," Obama said at White House announcing the international tax policy reform.

Contact us an Outsourcing Software Development Company in india.

We will use the savings to give tax cuts to companies that are investing in research and development here at home so that we can jump start job creation, foster innovation, and enhance America's competitiveness," Obama said.

hitting hard at the current taxation system, to which he had been very critical since his election days and as a Senator, Obama said: "It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York."

Reiterating his campaign rhetoric, the US President said: "The way we make our businesses competitive is not to reward American companies operating overseas with a roughly 2 per cent tax rate on foreign profits; a rate that costs taxpayers tens of billions of dollars a year."

Offshore Software Development

What is Offshore Software Development?

Offshore software development is a model of software development process where software development services are provided by an external supplier
who is located at different country from client's location. Many a times it refers to the company / parties to whom work is outsourced, is located at geographically different area. This paradigm is called as Offshore Outsourcing.

The main reason behind using offshore software development:
- Higher costs of development in advanced countries
- Nature of software needs when it can be outsourced
- Skilled and Cheap Manpower availability in some countries

Majorly India, Israel, Canada and Ireland are leading countries involved in Offshore outsourcing business. There are many other countries like European
, Asian, mainly developing nations are a part of this.

Advantages:
- Low Cost
- Taking advantage of Different timezones
- Advantage of internet based development
- No fixed cost for the company which is outsourcing
- Focus on key Strength or core competence and outsource other things
- Take a edge on competition with reducing cost but keeping quality

Contact us for any queries on Offshore Software Development .

Whats Next:
Industry experts have predicted that in coming years R n D i.e. Research and Development will be outsourced more.
Again this trend will work till the developing countries can product sufficient number of highly skilled professionals.
Its also being said that after some years this process will slow down as the developing nations will not be able to match up the demands
of highly skilled persons like MBA's, PHD's etc.

Still in the long term scenario its being considered as growing area of Outsourcing.