WASHINGTON (Diya TV) — Indian IT companies operating in the U.S. may soon be forced to amp up the hiring of American workers, something President-elect Donald Trump said would be a main pillar of his presidency.
The inconvenience provides further burden on Indian firms such as Infosys, Wipro and Tata Consultancy Services, who are already facing their worst growth dip in a decade. While these businesses are attracting newer projects in areas such as cloud and digital technologies from clients in the U.S., the growth is not offsetting the rapid decline in traditional services that contributes four out of five dollars to their revenue.
Infosys and Cognizant have cut their annual revenue forecast, while Wipro expects flat revenue growth in the quarter to December. This also has prompted India’s software lobby Nasscom to say that it would revise downwards the 10-12 percent growth it had projected in April. U.S. contributes to over 60 per cent of India’s $108 billion software exports.
“Any Trump inspired reform of the U.S. immigration laws will likely make it harder for the IT industry to move its employees into the US market. This will likely take the form of fewer H1Bs, higher cost for visas, and caps on the number of visas the firms can utilize,” says Peter Bendor-Samuel, Founder and chief executive of Everest Group, a global outsourcing advisory.
“The likely response would be to hire more US based resources. Taken together these changes would raise the cost to operate for the industry and reduce the Indian firms cost advantages,” he added.
During his presidential campaign, then-Republican nominee Donald Trump promised to hit IBM with a 35 percent tax for its outsourcing of jobs to India. He also hinted at completely doing away with, or bringing greater regulation to the H-1B visa program.
Nasscom says that India’s IT industry contributes to over $2 billion in annual taxes in the US, with a cumulative of $20 billion over 10 years, while generating 4,11,000 jobs in the U.S. as of 2015. The industry says that U.S. companies benefit from outsourcing as they can allocate resources to critical work locally.
“Given the trade relationship between India and U.S., especially on the IT services business, it may be difficult for the U.S. to take decisions against the industry. The new administration in the U.S. will encourage creation of more jobs for the local people. But, with or without Trump, the transformation in IT services would prompt Indian IT companies to be present close to the customers,” said Dinesh Goel of research firm ISG.
