How Trump and New Policies can impact India’s business with the US

While Donald Trump promotes "Make in America" and more jobs for locals, Indian IT companies have already started revising their long-standing offshore policies. But what is the long term impact of these?

IDG Staff Jan 09th 2018

Some feel that the Trump administration's desire to double the minimum wage for H-1B workers is going to harm the industry, as well as offshore employment figures for India. However, in all fairness, lack of domestic employment remains an urgent issue for US politicians to tackle.

The High-Skilled Integrity and Fairness Act of 2017 mandates that the minimum annual wage for H-1B visa holders increases to $130,000 from the current $60,000. The companies have cut jobs as a result and withdrawn from tie-up visa applications in large numbers.

From an Indian perspective, the jump in expenses is huge for the companies. It must be noted that a major part, nearly 50 percent of Indian IT-export revenue comes from the US. However, can a new thought process help considering that Indian companies can no more thrive on cost arbitrage?

The company perspective

Technology changes are creating a shortfall of skilled professionals in almost every company. However, it has never been more starkly apparent than it is now, as the IT landscape is transforming with a new mix of technologies, connected devices and web platforms.

CIOs, irrespective of the new offshore policies, are evaluating the skills they will need in the near future based on their business and technology roadmaps. Indian IT companies have mostly been hiring inexpensive postgraduates from their own country, who have offered skills comparable to western-university graduates, at a fraction of the wages. But with the mix of expertise required changing rapidly.  Software services companies will have to change their hiring policies.

How Indian IT companies can act responsibly

Indian IT contributes to 9.3 percent of India’s GDP.
Even if the Trump administration hopes to pass the "jobs for Americans" Bill fervently, it does not seem odd, given the way recent political strategies have shaped in the aftermath of the economic crisis.

Indian IT companies, to save on payroll, or to live up to employment expectations back in their country, have to rethink their value proposition to some extent. They must also look for new opportunities, such as fast-growing markets in developing countries, and research for large-scale automation in industrial management and connected equipment. Innovation and skill will protect organizations from shrinking profit margins that seem to be imminent all of a sudden.

Expert opinion on the H1-B drama

Vivek Wadhwa, a professor of engineering in Carnegie Melon University attended a PBS News hour session, earlier this year in April, where he said, "immigration is the life-blood of Silicon Valley". US needs the best and the brightest from around the globe, there's no debate on that. However, Wadhwa, who has also written a book, "The Driver in the Driverless Car", advocates decoupling the visa holder from the company, so that the system is more merit based and serves the individual more freedom and access to better salaries in the market. It will help push the average salary up.

Although NASSCOM has appealed for a clarification from the White House on the latest H1-B policy, staying prepared for industrial changes has always been necessary. The need of the hour is competitive strategy, be it for employment or development, even though it may curtail some short-term advantages.