Barack Obama has announced plans to slash taxes for American firms to generate jobs in the US, it has been widely reported.

The move is aimed to counteract the outsourcing of jobs; however, analysts say this is likely to create more problems than it aims solve.

A survey conducted by Asia Sentinel in India has concluded that it will be difficult to impose tax penalties on US firms that outsource jobs.

John Daval, a New Delhi-based outsourcing consultant said: "This is a really complex issue as enormous job losses have taken place in the US and it is difficult to quantify the exact tax losses triggered by outsourcing."

If the President does manage to impose tax breaks, it is believed this will hit American companies more than the Indian outsourcing industry.

However, the President's stance has caused some concern for the Indian outsourcing industry as nearly 70 per cent of India's US$40bn software is directed at the US market.