Why pressing Trump for a reprieve on the H-1B today may not help Modi or Indian IT

The inexorable changes sweeping the global tech landscape means that the Indian Prime Minister's attempts to fight for the H-1B will not rescue Indian IT in the long run.
Written by Rajiv Rao, Contributing Writer

Today, US President Donald Trump will host Indian Prime Minister Narendra Modi during his first visit to the United States since Trump was elected President.

The two leaders will spend five hours together and their meeting will include bilateral discussions on a number of issues such as defence and trade, to name just two, delegation-level talks, and finally a reception followed by a working dinner.

Both leaders have the enormous task of fulfilling their mandates -- specifically, jobs.

Modi wants to see more American companies like Apple shift their manufacturing from places like China to India, while Trump will be pushing for the further opening up of the Indian economy to US defence contracts as well as the whittling down of what the US considers high tariffs levied on US products such as solar panels and telecom equipment.

One of the key areas of cooperation will be in anti-terrorism and security, and the Indian procurement of 22 naval predator drones worth $2 billion will be the linchpin of this pact.

And yet the elephant in the room will be the H-1 visa fracas that has so comprehensively consumed both countries as of late.

On one hand, there is enormous pressure for Modi to get some kind of concession from Trump on the H-1B, a visa category that Trump has excoriated ever since he went on the stump last year. Indeed, one unverifiable report in Mint quoted India's trade secretary Rita Teaotia suggesting that the "H-1B visa issue will be one of the issues on the table during PM's visit."

On the other hand, a unnamed White House senior official said that there are no plans to discuss this issue since the matter is under review and there have been no changes in the H-1B policy so far.

On the surface of it, this is an issue that Modi would want to at least appear to resolve in some fashion. Indian IT is a $150 billion cash cow of which at least 60 percent originates from the United States. With industrial production having dipped at home, and some 20 million youth entering the workforce each year with no solid employment prospects and manufacturing nowhere near the levels it would take to absorb this population, Modi has his work cut out for him on the home front.

But it gets worse; automation is now running a scythe through Indian IT at home, and a sector that was once considered 'blue chip' for its employment prospects is now on red alert, with its employees in panic mode. Therefore, any further erosion into this flagship industry under Modi's watch is not going to look pretty.

The fact is that the very disruption and innovation that the outsourcing business model brought to the world is now itself getting upended at lightning speed. Infrastructure maintenance, data storage, and application development at company premises using low-cost coders, some onsite and the rest offsite, is now being rapidly replaced by cloud solutions. In many cases, these coders brought in as H-1Bs are themselves being supplanted by automation, a trend that is only going to increase at a geometric pace.

Just witness the drop in H-1Bs before Trump hit the campaign trail in 2016. As I wrote recently, the leading seven Indian IT players collectively received 37 percent fewer visas, a drop of 5,436 of these approvals in 2016 compared to 2015. This year applications have dropped 16 percent, which is unheard of in a category that usually sells out before you can blink.

Instead, US hiring has increased dramatically. As I wrote last month, Infosys has announced a plan to hire 10,000 US hires over the next few years with more to follow. TCS, Cognizant, and Wipro have indicated the same.

In fact, if the tide hasn't turned already, it will soon. What will make these firms, or any firm for that matter, succeed is their ability to ramp up transformational consulting, where winners are able to proactively advise their clients on how to do things differently and more innovatively -- and it goes without saying, better, faster, cheaper -- rather than waiting to be asked to do things.

Pressing for a less-restrictive landscape for H-1Bs may help Modi win over his vociferous US fan base, but it is unlikely to rescue an embattled Indian IT in the long run.

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