Trump, since the early days of his campaign, has said he wants to bring jobs back to the US. This includes both the manufacturing jobs that China has taken away and employment in IT industries that has come to India due to offshoring. Two days ago he said in Minneapolis he would impose a 35 per cent tax on companies
like IBM that sent jobs to India. For the Indian IT services industry, which earns almost 60 per cent of its revenue from the US, Trump’s stand on immigration and visa fees will be keenly watched.
Observers said the industry would have to watch whether such drastic steps were taken, but a short-term hike in visa fees was a possibility.
“The Indian IT sector must now brace itself for more trouble ahead. The sector is battling both cyclical challenges due to changes and shifts in the financial services and healthcare verticals as well as secular challenges from cloud shift, automation, pricing and insourcing. Sub-10 per cent growth for 2016-17 is certain,” said Arup Roy, research director, Gartner. “The Trump administration’s protectionist views will dampen growth prospects further. However, what happens during campaigning and what transpires in office can vary greatly and we did see early signs of this in his victory speech, but at a minimum it is a headline risk and adds to the uncertain times.”
“Trump during his campaign seemed to want to build a wall and substantially curtail immigration and restrict visa access. It is reasonable to expect a Trump administration might take these to a higher level,” said Peter Bendour-Samuel, CEO of Everest Group, in an email statement before the results were declared.
Experts said there might be short-term uncertainty over visa regulations. “But, that is going to be short-lived because the reality is in the US there is no workforce to support the industry. That is why they have to depend on countries like India,” said V Balakrishnan, former CFO of Infosys and chairman of Exfinity Ventures.
“Probably, they will tinker with some regulations to increase minimum wages , but I don’t think they can totally stop H1 visas,” he added.
Even a hike in visa fees will have a negative impact on the Indian IT services industry. In January this year, the US Citizenship and Immigration Service (USCIS) had announced a hike in visa fees to $4,000 for the H1-B category and L-1A and L-1B visa applicants had to bear an additional fee of $4,500. These changes have affected the profitability of Indian IT companies.
Sanjay Jalona, CEO and MD, L&T Infotech, said some of the recent statistics from the US made Indian IT imperative for American companies.
“If you look at wage hikes in the US across all sectors, the hike has been three per cent. For the tech industry it was 4 per cent. The fulfillment rate for all sectors, including technology, was 85 per cent, and for the technology industry 98 per cent. So the technology industry in the US is well paid, and there is a serious shortfall of skills,” he pointed out.