Problems for outsourcers.

Posted by Ed

Interesting developments over in India today with the arrival of the 2008 Finance Act.

We find this rather interesting as the new legislation will dramatically affect European companies who outsource operations to India, as capital gains tax, excise tax, cross-border deductions among others have all been increased. The upshot of this is that the cost of outsourcing to the region is going to increase significantly, driving up prices in those companies who draw upon the cheaper skilled labour force in India.

Despite these tax policy changes, India remains a top choice for outsourcing. However will this cheaper (and fluent in English) labour force with a robust business climate and entrepreneurial spirit fall foul of other upcoming outsourcing hotspots like China, South America and Eastern Europe? Luckily it won’t affect us as we don’t outsource any of our work, preferring to nurture home-grown talent.. but we’ll be keeping an eye on certain businesses elsewhere.