IT Stocks in focus: World's IT companies including India are worried about America's new proposed law, keep an eye on the stock:

News Topical, Digital Desk : According to news agency Reuters, India's IT sector is worried about the proposed outsourcing tax in America. American companies may have to pay 25% tax on getting IT services from abroad. This can have a big impact on India's $283 billion IT industry, which contributes 7% of GDP and has been exporting software services to America for three decades. However, experts believe that the bill is unlikely to be passed in its current form, but it will definitely increase delays and uncertainty in customer decisions.

Highlights of the new law- HIRE Act has been proposed by US Republican Senator Bernie Moreno. Under this, 25% tax will be imposed on American companies if they take services from abroad. There is a proposal to not recognize outsourcing payments as tax deductible expenses.

According to EY India, the tax on outsourcing can reach up to 60% by combining federal, state and local taxes. There can be delays, renegotiations and new conditions added to contracts by customers. Revenue growth in the US is already weak for IT companies, so the pressure will increase further.

What will be the harm to IT companies from this- Experts say that Arun Prabhu (Cyril Amarchand Mangaldas): “This is an artificial cost, which will make companies less competitive globally. Saurabh Gupta (HFS Research) Clients will now take more time to sign and renew contracts. Sophie Alcorn (Alcorn Law) If the bill is passed, American companies will give a legal challenge. Phil Fersht (HFS Research): “There is no possibility of full implementation, but there is a high possibility of a weaker or delayed version coming.” Yugal Joshi (Everest Group): “Global Capability Centers (GCCs) will be affected, especially on new setups and expansions.

Impact on India- Pressure will increase on American clients of big companies like TCS, Infosys, HCLTech, Wipro, Tech Mahindra, LTIMindtree. Delay in contracts may affect revenue growth and margins. Short-term volatility possible on IT stocks. In the long run, the lack of skilled talent in America will maintain the demand for outsourcing. The bill is unlikely to be passed in its current form, but it has raised the fear of regulatory risk for the IT sector. Indian companies will have to show more flexibility in contract structure and pricing with customers.