By Ruma Dubey
Currently, India, compared to the rest of the world, looks like an ocean of calmness and stability, notwithstanding the demonetization. The most important fiscal event of the year, the Budget is over and now we look ahead at the elections in the five states of India; obviously with UP taking the center stage.
Globally, it is only one newsmaker all over – Donald Trump; with his rhetorics, histrionics and Twitter-happy mode; he has kept the entire world entertained. The international news channels are simply not able to cover anything else!
The United Nations has a new chief - António Guterres and ironically, first day in office, he pledged to make 2017 a year for peace. But for the media, these sound bites from the UN had no relevance what with Trump giving a “breaking news” headline every day.
Trump has unleashed a sense of complete uncertainty and a feeling that the world’s geo-political relationships are coming down crumbling; brick by brick, all that was built over the years, Trump alone is bringing is all down.
We in India are watching it all with a lot of trepidation. For now, the IT sector is spooked and the pharma companies are also waiting in the sidelines. The H1B visa row is not a new thing. This was there on the horizon for the past couple of years and the IT companies themselves knew that they had to deal with this scenario, one day or the other.
The new H1B visa rules will impact the Indian IT sector; no doubts about that. For companies like Infosys and TCS, over 60% of their business comes from USA and with the stipulation of minimum wage limit being hiked to $130,000 per annum from the current $60,000 means that their margins will get affected. Companies will now send only their best and senior most employees to get the work done onsite in USA. Most of the work will shift offshore. It will be 18-24 months of a complete realignment for the IT companies, finding a new way to work but we will get through it.
Infosys chief, Narayana Murthy said that Indian companies should now hire more Americans and learn to get multicultural. That’s fine but can we afford it, that’s the question. Interestingly, the 2016 H1B visa report of USA shows that Infosys had got the maximum H1B visa’s, with TCS coming in at second slot.
And look at it from America’s point of view too – can they afford to have this new rule? Today, skilled manpower from Asian countries do highly intellectual work for half the price, which ensures that the product which you and me and the Americans get is affordable. But the moment the wage bill goes up, the customer price will also go up. Infosys and TCS will renegotiate their prices to accommodate this increase and that is where it will hurt most.
To be fair, Indians going there on H1B visas were getting a raw deal so now if someone is advocating a doubling of pay hike for them, why would they complain? From the employee perspective, this is a good move and it brings the foreign techie at par with the American. Not a Trump supporter here but this a good move as it could do away with the current lottery system where talent gets lost to the factor of luck. H-1B visa program was created to attract the best and brightest talent to the country, not to pick people randomly. The idea is that in the event when the number of applications exceeds the number of available slots, applications will be prioritized based on the applicant’s profile. In 2016 over 230K applications came in on April 1st. This means that only 4 out of 10 people were selected, that too by chance and not exactly merit.
Companies like Microsoft have offices all over the world and so has IBM, Cisco, Google, Amazon and scores of American companies. Simultaneously, the world is littered with startup ecosystems and tech hubs outside of the USA. Canada could become the biggest gainer in this shakeup. If one may recollect, in 2007, it was immigration law which made Microsoft set up a satellite office in Vancouver, where they hired engineers whom they could not get into USA. Two years later, Bill Gates very vocally said that if limits are issued on H1B visas, the very place of dominance which US has over technology will come under treat. After that, Google, Facebook, Apple and some 10-12 more companies set up offices in Canada. Maybe it is Canada where the Indian techies will head to now.
Lets be clear here – it not as though Americans do not have the skills and talent required; it is just that foreigners come cheaper. Companies really do not care of the people; they care only when they start making the money. They have no emotions; they are not human beings. Companies will simply follow where business is more attractive.
And all this hue and cry by the media over this? It is not as though USA has put a complete ban on immigrant high-skilled workers going to work there; it has made it more expensive. Companies will either have to cough up more money or learn to cope with offshore work, which many say, is not really up-to-the-mark when it comes to quality – itna paisa mein aisa hi milega!
So lets not write-off obituaries for the IT companies; it a time of change and any new way of life, will take time to settle. Let us see how the IT companies cope with this new challenge – no one will be shutting shop, that’s for sure!