​Trump's ascendancy to the White House could severely maul Indian IT

His campaign speeches lambasting outsourcing and offshoring don't bode well for the industry already reeling from dramatic disruption.
Written by Rajiv Rao, Contributing Writer

To get a sense of what's been one of Donald Trump's pet subjects that dominates his mind and agenda, look no further than this speech he gave on November 7, just a day before the elections.

"IBM laid off 500 workers in Minneapolis and moved their jobs to India and other countries. A Trump administration will stop the jobs from leaving America, and we will stop the jobs from leaving Minnesota," Trump said in a speech in Minneapolis.

"If a company wants to leave Minnesota, fire their workers and move to another country and then ship their products back into the United States, we will make them pay a 35 percent tax. We will also unleash American energy including shale oil, natural gas, and clean coal," he added.

As the US -- and much of the world -- continues to feel the seismic shocks that continue to reverberate from Trump's ascension to the throne of American politics, the burning question haunting many IT professionals, both in India as well as the US, is what is Trump going to do about outsourcing?

How will he now officially deal with Indian tech workers deployed to the US to work on projects via H1B visas? Also, what is he going to do about US companies sending tech work overseas to take advantage of cheap labour? Or even American outfits such as GE and IBM taking advantage of abundant overseas engineering talent by opening up development centres and other specialist sub-divisions abroad?

First, the H1B visa. As I had pointed out earlier this year, Trump absolutely despises the H1B program and serially mocked Marco Rubio on the campaign trail for planning to triple the quota which Trump said would "decimate women and minorities".

He has been similarly unequivocally skeptical about any kind of STEM -- people in the fields of science, technology, engineering, and math -- shortage in the US, stating in his campaign's position paper earlier this year that the US "graduates two times more Americans with STEM degrees each year than find STEM jobs, yet as much as two-thirds of entry-level hiring for IT jobs is accomplished through the H1B program".

What Trump said he would do if he came to power vis-a-vis foreign H1B hires would be to "force companies to give these coveted entry-level jobs to the existing domestic pool of unemployed native and immigrant workers in the US, instead of flying in cheaper workers from overseas."

Now the time has come to see if he is able to act on his election promise, much to the chagrin of Indian IT who live and die by the H1B. Infosys, for instance, makes 60 percent of its revenues from contract work in the US that entails shipping its engineers there.

And what of Trump's specific stance on "offshoring" -- the practice of sending all work to be done to places like India, which still makes up an average of 25 percent of an Indian IT company's revenue?

"If I am president, I will not issue any H1B visas to companies that replace American workers and my Department of Justice will pursue action against them," said Trump when news broke of Disney shipping in Indian H1B IT workers to replace 400-odd American techies at Disney's Florida offices with the sole purpose of being trained by their American counterparts whom they would eventually replace.

But how easy will it be to single-handedly dismantle a $150 billion industry?

BPO industry stalwart Raman Roy said in the Indian Express newspaper that the sector is an integral part of the economic growth story of the US. "I have no hesitation in saying there will be no issues. He [Trump] cannot produce a million people overnight to do the job. He cannot say we will shut off the switch ... there is commerce that is going to happen ... card queries, insurance and mortgage queries that have to be answered that are being done from here [India]," Roy added.

Also, Trump very pointedly went on the road to woo the almost 4 million expatriate Indian population in the US. He even went so far as to say "Ab Ki Baar Trump Sarkaar" (translation: It is now Trump's turn to govern), in homage and direct imitation of Indian Prime Minister Narendra Modi's 2014 election slogan, in a 30 second youtube advertisement ahead of the Hindu Diwali festival in October.

"The Indian and Hindu community will have a true friend in the White House," he went on to say in the ad. "We love the Hindus, we love India," he added, saying that he was looking forward to forging productive bonds with Modi. (India also has 140 million Muslims, 24 million Christians, and 20 million Sikhs).

Right now, though, it's an entirely unpredictable world and no one knows which campaign promise Trump will stick to and which ones he will discard or ignore. (Apparently, his vow to completely ban Muslim immigration has already been dropped from his website).

Also, almost every global American tech company you can think of -- from GE to Cisco to Microsoft -- has opened an R&D center in India, and in many cases they are the biggest of their kind outside of the US. Forcing those jobs back with the threat of a 35 percent tax on companies who offshore jobs may be more difficult to implement than he thought, since the world of innovation and supply chains in manufacturing are now global processes.

Still, with the rust-belt indicating the general tenor of feelings of alienation and anger against the elite clubs of Capitol Hill, Silicon Valley, and Wall Street, just making life a little more difficult for Indian IT rather than taking a sledgehammer to it may be more than enough to deliver mortal wounds while keeping his campaign promise.

After all, Indian IT has halved its revenue growth in just the last year or two and is facing a grim future as its core business model is being violently disrupted by the cloud and artificial intelligence. All of India's flagship IT outfits have slashed and continue to slash their revenue guidances for each subsequent quarter and the current year.

Even the extraction of just a few pounds of flesh by Trump will be enough to cause the kind of trauma that the sector may ultimately not be able to withstand.

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