Info-tech

IT companies worried over implications of Trump win

Venkatesh Ganesh Bengaluru | Updated on January 15, 2018 Published on November 09, 2016

it-cos-table

Software exporters are rattled about the possibility of higher visa costs and stricter curbs around labour mobility, but are hopeful that the lack of availability of skilled manpower in the US will help in growth of the sector, going forward.

Post the victory of Donald Trump, most people in the industry voice similar concerns, especially at a time when the $143-billion sector is seeing a growth slowdown, coupled with increased protectionist measures taken, most recently by the UK. Trump, during his election campaign, came out against IT companies (naming some like TCS and HCL Tech), for taking away US jobs using the H1B visas, and said that he will increase the H1B wage to $100,000 per annum, in addition to strict immigration laws.

An election issue

While outsourcing of skilled jobs have always been a point of political contention since the past three elections, this time around the problem is genuinely worrying the industry.

“Brace up for troubled times ahead especially if the (protectionist) views were to crystalise into some serious policy implementations,” said Arup Roy, Research Director at Gartner, adding that a sub-10 per cent growth for the sector is now certain. A few days back, industry body Nasscom said that it would look at reducing the guidance (of 10-12 per cent) for the IT sector in the 2017 fiscal year. Software exports, which grew 10.3 per cent in 2015-16, are expected to reach $108 billion.

A former CEO with a bellwether company, who did not wish to be quoted, told BusinessLine that his (Trump’s) victory is of concern for the sector in the near-term. However, he added that in the long term, the lack of availability of skilled engineers in the US and usage of automation technologies would help the sector. V Balakrishnan, former Infosys CFO, agrees and pointed out that there will be short-term uncertainty when it comes to visas.

Nasscom has put up a brave face, saying that leaders of the Indian IT industry look forward to working with Trump and his administration both in the House and Senate, to highlight the sector’s contributions to the US economy and the investments made.

“Indian IT companies have helped US companies develop new technologies and new products time and time again, significantly benefiting those companies, their customers, the American job growth story, and the economy,” pointed out BVR Mohan Reddy, former Chairman of NASSCOM, and Founder and Executive Chairman of Cyient, a Hyderabad-based company.

New regulations

In January this year, the US notified that an additional fee up to $4,000 will be applicable for certain categories of H1-B and L1 visas. Further, the US Citizenship and Immigration Service (USCIS) said companies that have applied for certain categories of H-1B visas post December 18, 2015, will have to dole out an additional $4,000.

Additionally, in L-1A and L-1B categories, companies will have to shell out an additional $4,500. All these fees are on top of base fees such as processing fee, Fraud Prevention and Detection Fee and American Competitiveness and Workforce Improvement Act of 1998 fee.

Sanjoy Sen, Doctoral Research Scholar, Aston Business School, pointed out that while work visas for Indian workers wouldn’t be stopped overnight, it nevertheless does bring in concerns about how the entire issue would be dealt with.

Published on November 09, 2016
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