A new US legislative proposal, which is aimed at curbing outsourcing, is expected to affect the Indian information technology sector if passed in the upcoming days.

Senator Bernie Moreno from Ohio introduced the Halting International Relocation of Employment (HIRE) Act, which seeks to discourage American companies from hiring foreign workers.

The legislation will impose a tax on any company that employs foreign labour instead of Americans and will use the generated revenue to fund workforce development programs to 'help the middle-class'.

Speaking about the legislation, Moreno said, "While college grads in America struggle to find work, globalist politicians and C-Suite executives have spent decades shipping good-paying jobs overseas in pursuit of slave wages and immense profits – those days are over."

He further said: "It’s time to fight for working class Americans and ensure they can work and retire with dignity. If companies want to hire foreign workers instead of Americans, my bill will hit them where it hurts: their pocketbooks.”

HIRE Act is brief

Creates a 25% tax on outsourcing payments, defined as any money paid by a U.S. company or taxpayer to a foreign person whose work benefits consumers in the United States.

Creates a “Domestic Workforce Fund” to collect any money raised from the outsourcing tax, which is used to support apprenticeships and workforce development programs.

Prohibits companies from deducting any outsourcing payments.

Several IT services firms, including   TCS, Infosys, Wipro, HCLTech and Tech Mahindra, derive majority of their revenue from US clients.

A 25% surcharge on these services, combined with the loss of deductibility, dramatically increases the total cost of offshoring for American firms, reported The Economic Times.