Blog Details

The US may soon add new taxes on digital services. This move could impact global tech trade. It matters to India because top companies like TCS, Infosys, & HCL earn a large part of their income from the US. These taxes might reduce their profits.

India has been a strong player in IT services for many years, offering software development & Remote IT support to global clients. If US firms face higher costs, they might cut back. As a result, Indian IT companies could start looking at the Gulf region as a new market for business growth.

US Digital Tax Plans

Earlier, US President Donald Trump talked about adding taxes on digital services, similar to what the European Union did. The US said its tech companies, like Apple, Google, & Microsoft, were not treated fairly in other countries. So, the US planned to create its own tax system.

If this happens, it will affect both US and Indian IT services companies. Indian firms serve many US industries like banking, healthcare, & retail. A new tax may increase costs for service and result in less outsourcing. To handle this, Indian companies should grow Remote IT support in other regions to stay competitive.

India’s Dependence On The US

India’s IT sector has strong ties with the US market. TCS receives 51% of its revenue from the US, Infosys earns 56.5% of its revenue from North American clients, and HCL also makes 56.5% from the clients of the United States. This shows how much Indian companies rely on one region.

Any new US tax or policy can affect them quickly. If outsourcing becomes costly, Indian IT firms may lose business. Relying too much on one country is not safe. To reduce this risk, Indian IT companies should expand services like Remote IT support to other areas like the Gulf, Europe, and Asia for steady growth.

Current Tariff Situation

India already deals with high tariffs on exports. The US places nearly 50% tariffs on Indian goods, one of the highest in Asia. These mostly apply to items like clothing, jewellery, & machines. If similar taxes are added to IT services, it could hurt the industry.

Higher costs may lead US companies to reduce outsourcing from India, resulting in fewer projects and less income for Indian firms. This could potentially slow down the economy of the country. To manage this risk, Indian IT companies should expand their presence in other markets & offer IT services to clients outside the US.

Why India Needs New Markets

When a company depends too much on only one market, it becomes weak against sudden changes. If tariffs in the US increase, Indian IT firms will face higher costs. As a result, American companies may reduce their spending on outsourcing. This can reduce demand, lower income, and cause financial problems.

The smart solution is to diversify. Indian IT companies need to explore new markets so that even if one market slows down, they can continue earning money from other places. Expanding into new countries means stability, long-term growth, & less risk.

This is exactly why focusing on the Gulf region is becoming very important. With remote IT support, Indian companies can easily serve Gulf clients. Businesses there are looking for advanced technology solutions, and India can provide those services quickly & affordably.

The Gulf As An Opportunity

The Gulf countries are now one of the best places for Indian IT companies to expand. Indian companies already have offices in the UAE, Bahrain, Saudi Arabia, and Qatar. These countries are investing heavily in digital technology. Areas like FinTech, artificial intelligence, smart cities, and automation are part of their national strategies.

For example:

• The UAE has put technology at the center of its long-term economic plans.

• The NEOM project of Saudi Arabia plans on building an entirely digital and smart city.

• Qatar and Bahrain are improving their digital banking systems & adopting AI in multiple sectors.

This is a massive opportunity for Indian IT service providers. By offering IT services to Gulf businesses, Indian companies can expand their revenue & reduce their dependence on the US.

An additional major benefit is that India already has very close ties with the Gulf. Millions of Indian workers live in Gulf countries. This creates cultural familiarity and trust, which makes business partnerships easier. For Indian IT companies, this environment is perfect for building long-term business relations.

Other Industries Also Shifting

The IT sector is not the only one looking at new markets. Other Indian industries are also shifting because of US tariffs. For example, the jewellery industry has been badly affected by US trade policies. To manage this, Indian jewellery exporters have started focusing on Gulf countries where gold & diamond demand is strong.

Similarly, India’s ready-made garment industry depends heavily on the US. Around 40% of its exports go there. With new tariffs, profits have fallen, & revenues may be reduced by almost half. These examples show that Indian industries are slowly reorienting their focus towards the Middle East & other regions to reduce their dependence on the American market.

For IT companies, this is a good signal. By learning from other industries, Indian IT firms can also make the shift earlier & secure a strong position in Gulf markets.

Global Trends

The global trade environment is changing quickly. In the past, China faced similar problems with US tariffs. To deal with this, China started exporting more to Africa, Latin America, and other Asian regions. Now, more than half of China’s exports go to these areas, which brings trillions of dollars in revenue.

India is following a similar approach. It has already signed a trade deal with the United Kingdom & is in talks with the European Union & Australia. The main aim is to reduce the risk of depending too much on the US market.

Indian IT services companies can also use this strategy. With remote IT support, they can reach global clients in many regions without opening physical offices. This makes diversification easier, faster, & more cost-effective.

India–US Trade Numbers

Trade data between India & the US shows a clear gap. India sold $87.3 billion in goods to the US, while buying only $41.5 billion from the US. This caused a $45.8 billion trade deficit for the US, which was 5.9% higher than the year before.

By mid-2025, the US had a $34.3 billion trade deficit with India. Since 1985, the US has never had a surplus with India. Because of this ongoing gap, the US may add digital service taxes. Indian IT firms should now expand Remote IT support in Gulf markets.