Senator Bernie Moreno (R-Ohio) has introduced the Halting International Relocation of Employment (HIRE) Act, targeting US companies that outsource work overseas. Unveiled on September 5, the bill proposes a steep 25% tax on outsourcing payments, striking at companies that hire foreign workers instead of Americans. Moreno positioned the measure as a fight for American workers struggling to find jobs in a competitive global economy.
Key Provisions of the HIRE Act
The HIRE Act outlines three major changes:
- 25% Outsourcing Tax: Applies to any payments made by US firms to foreign individuals whose work benefits US consumers.
- Domestic Workforce Fund: Tax revenues will be redirected into apprenticeships and workforce development programs in the United States.
- No Deductions Allowed: Companies cannot deduct outsourcing-related expenses from their taxable income.
These measures are designed to penalize businesses that offshore work while incentivizing domestic hiring.
What It Means for India
India, one of the largest beneficiaries of US outsourcing, could be directly impacted if the bill passes. The country’s IT and business process services sector, which depends heavily on US contracts, may face reduced demand as American firms seek to avoid the 25% tax burden. This could lead to higher operational costs for US companies and potentially reduce India’s export revenues.
While the HIRE Act is currently just a proposal, its passage in existing form appears uncertain. Lobbying from US corporations reliant on cost-efficient Indian outsourcing could dilute or block its implementation. Still, the bill reflects growing protectionist sentiment in Washington, especially around foreign workers and offshore contracts.
The Bigger Picture
For India, the threat of outsourcing restrictions in the US is not new. Calls to reshore jobs surface regularly in American politics, particularly in election years. What makes the HIRE Act significant is its aggressive taxation model and its focus on funneling penalties directly into domestic workforce programs.
If passed, the Act could reshape outsourcing relationships, forcing Indian firms to rethink their strategies, strengthen automation, or diversify into other global markets. For now, India’s IT industry will be watching Washington closely.
