New US President Donald Trump’s ‘Buy American, Hire American’ call in his inaugural address has put the Indian IT industry on edge.
New US President Donald Trump’s ‘Buy American, Hire American‘ call in his first address has put the Indian IT industry on verge. For the $150-billion Indian IT industry, the US is the biggest export market, book-keeping for nearly 60 percent of its export earnings. The Indian IT industry is at present fighting with slowing growth amid big changes in the technological landscape (like automation and artificial intelligence) and global headwinds like Brexit.
“From the IT Firms viewpoint, everybody is watching. We all expect the US president Donald Trump` to look at a broader global environment and take a decision,” stated Mritunjay Singh, executive director at Persistent Systems. “We have to go further than speeches to see what legislations are coming in.”
Mr Mritunjay Singh points out 2 key bills pending in the US for tightening the H-1B visa system: “Do you have at least 50 percent of the employees who are local US citizens? And the other bill is about minimum salaries.”
The first bill is about restrictions from hiring H-1B employees if companies employ more than 50 people, and more than 50 percent of the employees are H-1B and L1 visa holders.
Another bill, among other things, suggests increasing the minimum salary of H-1B visa holders to $100,000 per annum (from $60,000 per year currently).
Hiring more workers in the US could considerably raise costs for Indian tech firms, analysts say.
Mr Mritunjay Singh states about 48 percent of its US employees are locals and their minimum wage are close to the $100,000 mark. So he states that Persistent Systems will face ‘minimal’ impact in terms of cost structure if the legislations come into force.
Still, Mr Mritunjay Singh stated Persistent Systems is expanding its business in other geographies to de-risk from US business.
The top managements of Wipro and Infosys have stated that they are boosting US hiring to have a minimal impact. Also, the IT companies are changing their business models so that they can deliver from different locations globally through innovation.
IT Industry veteran Abidali Z Neemuchwala, who is also the CEO of Wipro, stated the company “entire business model is undergoing a fundamental shift – how much you can deliver from different locations globally through innovation”.
In the meantime, Indian IT industry body, Nasscom, is planning a visit to the US in the next few weeks to reach out to American policymakers and lawmakers.