Time to reboot

With the Indian IT industry heavily dependent on US markets, the resolve of President Donald Trump to pull the plug on influx of Indian IT professionals into US has flustered many. The consternation of major IT players and Indian IT graduates is obvious.

The US accounted for a whopping 60 per cent of the $155 billion annual business of the Indian IT companies. A bulk of the revenues of Indian companies’ US businesses came from onsite projects executed mostly through import of skilled labour from India.

In fact, the allure of Uncle Sam had been motivating Indian students to take up IT as a major. Indian IT majors argue that shortage of STEM skills (science, technology, engineering and maths) in the US was the cause behind their sending Indian IT professional to US on work visas.

Regardless of what these companies claimed, the H-1B visa proved to be a boon for Indian IT firms and an avenue for Indian graduates aspiring US postings. Most IT companies here have become heavily dependent on sending workers to countries where there is profit to be made just on wage arbitrage.

Many Indian IT engineers settled down in the US with their families and remitted dollars back home. Indian IT companies, especially the big ones such as Infosys, TCS, Wipro benefited a lot as the payout for Indian staff posed in the US was far less than their US counterparts.

For far too long, IT services companies have relied on shipping low-cost skilled labour to the US to drive higher margins. Ever since the IT revolution in the country in the late 1990s and India emerging as a major IT power in the world, liberal US policy under successive presidents have helped the cause of Indian firms. During the terms of Barack Obama, his predecessor George Bush junior, and, before that, the term of Bill Clinton, the IT sector came into bloom.

However, the coming of President Donald Trump and his policy of ‘Buy American and hire American’ has sent shivers down the spine of IT firms.

However, we should shed blaming the Trump administration for its decision to tighten the visa regime. The US is within its rights to change its policies. Every country in the world is entitled to bring in policies that suit it best.

Considering the prolonged slump in the US job markets, Trump may not have too many choices to revive US economy. In fact, it was one of Trump’s main electoral planks during campaigning. Instead of cribbing over it, Indian IT firms should do well to reinvent their business models and adapt to the new policies.

One option before them is to spread to newer geographies and focus on Indian markets. India accounts for less than 10 per cent of the revenues of most large IT companies. They should also adapt new business models keeping in mind the changes in the policy paradigms of foreign countries.

Reliance Industries chairman Mukesh Ambani has advised the industry to look at the US deterrent as a blessing in disguise to focus on Indian markets. Speaking at a Nasscom leadership forum Wednesday, Ambani said: “The IT industry can focus on solving problems right here, which is a huge market.” With winds of protectionism and deglobalisation blowing in the US and many other developed countries, India should reconfigure its business dealings towards other countries.

India must act quickly to cope with the massive disruptions that are likely to unfold from such protectionist measures. Otherwise, the sector, so far the poster boy of growth story in the country, could soon hear its death knell tolling. Indian IT companies must reboot now.

18,144 total views, no views today

recommend to friends
  • gplus
  • pinterest
  • whatsapp

Recent articles

BMC approval to ward delimitation

Bhubaneswar: A special corporation meeting here Monday approved by a resolution on the delimitation of wards and effecting of fresh reservations. Five revenue villages have been incorporated into the existing 67 wards. After the meeting, BMC commissioner Krishan Kumar said … Continue reading

No views yet