Opinion

How Nasscom played its cards right in the US

Rajkamal Rao | Updated on September 20, 2018

Nasscom Nimble footed   -  /iStockphoto

The IT body has invested in US development centres, provided jobs to Americans and earned brownie points from US leaders

Three years ago, the Indian IT industry in America was a mess. Even under a lenient President Obama, there were numerous headwinds facing the big IT majors, including constant talk in the corridors of Congress and the media about the abuse of L-1B and H-1B visas, coveted by Indian tech.

When President Trump took office with a decidedly pro-American stance to everything, the trouble indicator for Nasscom companies swung directly into the red zone. And for good reason.

During the last 18 months of the Trump administration, there has been a substantial tightening of all kinds of worker visas. The number of H-1B applications subject to administrative review has skyrocketed. The burden of justifying H-1B visa renewals is now solely with the beneficiary and rejections are common. Even student worker training visas are under pressure because the government has all but disallowed their working at third party client sites for body shops.

But thanks to brilliant positioning by Nasscom and some external factors, the fortunes of the big Indian tech companies have never looked better.

Investing in the US

Nasscom has begun investing in building US development centres and hiring Americans to jobs previously performed by Indians on H-1Bs. Infosys, in a nod to its outstanding political acumen, has invested in a development centre in the state of Indiana, the home of Vice-President Mike Pence, a future presidential candidate and is already well along in its plan of hiring 10,000 Americans.

This is a complete about-face of Nasscom’s strategy to outsource as many American jobs to India. Americans are deeply appreciative of any company that invests in their communities, regardless of corporate origin.

Is a tech degree required?

Nasscom has also cleverly dropped its age-old defense that the educational qualifications of the Indian tech worker are somehow unique. In an age when even big companies like Intel and GitHub do not require technical degrees to build code, people in the industry knew that this defense was always a stretch.

Many Americans recognised that a fresh Indian graduate is not readily employable and only becomes productive following intense boot camp training in the companies’ sprawling centres. So, why not replicate this model in the US?

Cognizant is doing exactly this and has won praise for its effort. In Dallas and its corporate home of New Jersey, the company, in partnership with Per Scholas, is inviting any US citizen or permanent resident to begin training in hot technologies, including test automation, big data and agile development. The educational qualifications needed are just a high school diploma (12th grade pass) and a keen aptitude to learn.

Cognizant fully pays for the $7,500 six-week course. Students are not paid to attend training but are guaranteed an interview to anyone who completes the training.

For about the cost of a H-1B visa with premium processing, it is able to lock in a grateful American who comes with no visa restrictions whatsoever. It gains brownie points from community leaders for investing locally. And it is seen as a leader trying to solve problems of talent acquisition and training in the IT industry.

External factors

External factors are helping too. The American economy is on steroids and unemployment is at historic lows. The Business Round-table recently stated that America is direly in need of more tech workers from abroad. Being welcomed is a lot different from being despised, and Nasscom is clearly pleased at the robustness of President Trump’s economy. And in a curious twist, Democrats and mainstream media outlets who hate Trump have shown a willingness to embrace anyone who is seen as a victim of Trump’s nationalist policies. Unbelievably, Nasscom is riding an indirect sympathetic wave as media stories unfold about how harsh treatment of H-1B visa holders is forcing them to immigrate to third countries such as Canada or even return home.

Meanwhile, back in India, for an industry which has relied on labour cost arbitrage, Nasscom has always favoured a weak rupee. The big IT majors are delighted that the rupee has fallen 12-per-cent against the dollar this year. This strengthens Nasscom’s competitiveness in foreign markets as it earns more revenue in rupees — cash which it can use to pay higher wages, invest in business initiatives or buy stock back.

So Nasscom’s Golden Age seems to be back — a prospect few thought was possible just a few years ago. As the old American saying goes, what goes around has to come around.

The writer is Managing Director, Rao Advisors LLC

Published on September 20, 2018

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