The Indian information technology industry should tread cautiously now as Donald Trump takes over as the new President of the United States, said industry experts and IT sector leaders.
“The election of Mr Trump to the Oval pretty much just hammered in the final nail in the coffin for the traditional IT outsourcing market as we know it,” said Phil Fersht, CEO of HfS Research, an IT research firm, in a blog post.
“Trump’s campaign has already outwardly promoted raising the H1B minimum salary to $100,000 per year (from $60K). This makes managing complex IT projects a lot more expensive and negate much of the cost advantage for complex engagement requiring “landed” IT staff,” added Fersht.
The US is the largest market for the Indian IT industry, which accounts for 60 per cent of IT exports. Arup Roy, research director at Gartner said: “A sub 10 per cent growth for FY17 is certain” and said the sector, which is already battling changes and shifts in financial services, health care verticals, and larger business shifts such as cloud, automation, pricing pressure, insourcing, should now brace for “trouble ahead”.
“Trump’s win is a nightmare for IT firms that rely heavily on temporary visas,” said Patrick Thibodeau, national correspondent at Computerworld. The Indian IT industry relies on the H-1B visas that allow transfer of skilled labour to the US.
Resentment has been building up against Indian IT employees in the US after stories of local workers being replaced by their cheaper Indian counterparts resurfaced last year.
The Indian IT industry says the issue of visas and immigration are part of usual political rhetoric. Bhupender Singh, CEO of Intelenet, a BPO firm, said neither George Bush nor Barack Obama banned outsourcing in spite of election rhetoric to the contrary.
“Also, Trump being a businessman with a majority of products being made in China, I think commercial realities will prevail especially since Indian IT-BPO companies bring a lot of economic value to US companies. I don’t see any major disruption,” he added.
“We know the US has a shortage of skilled workers, so we will work with Nasscom on co-operation initiatives. We try not to let these big events affect us,” said Sanjay Jalona, CEO of L&T Infotech.
Executives also point out that the industry has already started making some changes on the visa front. “If you look at the top five (IT) companies, their percentage of local hires has been increasing…, ” said Vineet Nayar, former CEO of HCL Technologies and founder of Sampark Foundation.