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Three reasons Indian IT is wary of Donald Trump administration

It is the season of change and worry. A new avowedly protectionist administration will be sworn in on 20 January, when Donald Trump takes oath as the 45th President of the United States.

By Venkatesha Babu        Last Updated: January 18, 2017  | 17:01 IST
Three reasons Indian IT is wary of Trump administration
US President-elect Donald J. Trump

It is the season of change and worry. A new avowedly protectionist administration will be sworn in on 20 January, when Donald Trump takes oath as the 45th President of the United States. The Indian IT industry, which exports software and services worth $108 billion, gets about 65 per cent of it from the US market, the world's largest. Any developments in this key market are likely to have a huge impact on the industry.

So when the President Elect and his nominees say that they propose radical changes in visa regime, it is a cause for concern. In spite of misgivings, Indian IT companies who are in a 'wait and watch' mode say that they are hoping that some of the harsh rhetoric maybe 'campaign speak and hoping that things would be tempered during actual implementation.'

However here are three things they have to watch out for.

1.   H1-B and L1 Visas: Of the 65,000 H1-B visas (which are temporary work visas) issued annually, Indian IT companies get about 60 per cent of them. In spite of the shift to digital and delivering services via Cloud, most leading companies still deliver a third of the work onsite. One of the reasons why H1-B is popular is that in-demand, cutting edge, technology expertise may not be available locally, specially at scale.

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Indian companies will now have to scramble to hire the limited number of experts driving their costs askew, hurting their USP of delivering high quality at low cost. L1 visas are intra-company movements. With the new incoming administration promising to crackdown on both visa categories, Indian companies may be forced to accelerate even more the shift to cloud delivery.
 
A new bill named 'Protect and Grow American Jobs Act' proposes that IT companies using H1-B pay people on that visa a minimum of $100,000 from the current $60,000. It would also insist an Master's Degree for those coming in on that visa. All these moves are likely to curb Indian IT companies flexibility in deploying talent.

2.   Targeting outsourcing companies: The Trump administration has already brow-beaten likes of Ford and Carrier into retaining jobs in America, whether it made economic sense or not. Senator Jefferson Sessions, Trump's nominee for Attorney General has declared that he would not allow '…..companies to outsource and hire cheap foreign labour from abroad to replace American workers.' Large Fortune 500 companies might rethink their outsourcing contracts, hurting Indian companies.  

3.   Impact on delivery models and profitability: Most Indian IT companies were impacted in May 2016, when the outgoing Obama administration hiked H1-B and L1 visa fees by an additional sum of up to $4500 per visa. Trump's senior policy adviser Stephen Miller has already proposed very high application fees for H1-B and L1 visas. This is likely to hurt Indian players the most.

 

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