Shishir Asthana
Moneycontrol
A social media tweet at the peak of US election compared then Republican nominee and now President-elect Donald Trump as the Raj Thackeray of USA, in an apparent reference to the latter’s protectionist, sometimes violent, agenda to save local jobs.
While the comparison was outlandish, the logic behind it did make a point. Just like Raj Thackeray, President-elect Trump’s rhetoric appeared a vote grabbing exercise meant for the local audience.
But now that Trump is elected, making the same statement publicly sets alarm bells ringing in the information technology (IT) sector, since this time Trump made a clearly implied reference to the H-1B visa.
Speaking in Iowa in front of thousands of his supporters, Trump said that he would “not allow Americans to be replaced by foreign workers”.
The H-1B is a non-immigrant US visa that allows employers to temporarily engage foreign workers in ‘specialty occupations’. The regulations define a ‘specialty occupation’ as requiring theoretical and practical application of a body of highly specialized knowledge in a field of human endeavor.
IT professionals from outside the US, including from India, usually work in the country on an H-1B visa.
But how much bite does Trump’s bark have? The USD 100-billion Indian IT services exports to the USA is unlikely to see much of an impact.
Here are three reasons why Trump does not scare the Indian IT sector.
- US does not have the in-house talent to meet its requirement. ‘The reality is that there are not enough graduates coming out of the universities all over the US, both graduates and undergraduates,” Cognizant President Rajeev Mehta was recently quoted in the media saying. “Given the disruption (in technology) that is going is going on, it will become a greater problem. The issue is around education and we hope that we can get them to understand that,” he said.
US Labor department study has shown that there is an acute shortage of 2.4 million jobs in STEM (Science, Technology, Engineering and Math) skills among US graduates. More than 50 per cent of these are in IT space. For the IT sector, it is no longer a question of low-cost employees, but of finding employees possessing relevant skill sets.
- Indian companies are already using more local talents than sending Indian engineers. Infosys founder NR Narayana Murthy recently said that the company had started reducing the onsite effort requirements to 10-15 per cent of the total effort from the 30 per cent earlier.
Local talent was recruited largely to meet the 10-15 per cent efforts in the project cycle. Currently, Infosys regularly recruits 500-700 people each quarter in the US and Europe, around 80 per cent of whom are locals. These locals are trained and gradually deployed.
- IT sector is shifting from a manpower intensive sector towards automation and artificial intelligence, which require fewer people to complete the job. With better technology and faster network, Indian companies are migrating to these virtual services. More automation would mean fewer onshore developers.
Indian companies in their interaction with analysts have said that they are accelerating the trend of delivering automation and leveraging the cloud. The fastest growing segment of almost all IT companies is digital. At Infosys, revenues from the digital segment have gone from zero to 5 per cent (roughly Rs 3,000 crore) of its top line in a span of two years. Others players are also gearing up on their digital offerings through in-house developments and acquisitions.
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