’Buy American, Hire American’, Donald Trump’s new rhetoric, keeps the Indian Outsourcing business guessing.

STANDING IN A QUEUE in front of the ATM in my office lobby, I felt a sense of liberation even though a little cashless. I thought to myself; when was it the last time that I felt so joyous taking my own money out of my ATM? Since the government’s November 8 DeMon move, there is new-found camaraderie at the ATM in our office lobby, a chance to hang out with colleagues outside the glass cubes.

Working in the IT industry in Mumbai, I have not been impacted much by demonetisation. However, what remains to be seen, is how it would impact the global outsourcing space and my job as a consequence.

While the impact on rural India and sectors like realty where cash transactions are a major component is clear in the near term, the IT industry remains mostly insulated from demonetisation due to its very nature. On the domestic front, the demand for e-wallets, apps, e-banking, plastic money etc will see a substantial increase in the IT workforce. E-commerce and m-commerce will get a boost. Internationally too, India’s outsourcing sector is not expected to be impacted much.

But then the other major event that rocked November 8, along with Modi’s demonetisation, was Donald Trump trumping all critics, pollsters and his wellestablished Establishment rival Hillary Clinton to be the next incumbent at the grand White House. Three words have largely articulated Trump’s unexpected showing – Bring jobs back! And of course, Build a Wall, too! The billionaire-president coined a new rhetoric – Buy American, Hire American.

In his 15-point poll agenda, one of the primary promises was to give jobs back to Americans. Trump has also criticised countries like India, China, Philippines, Mexico for stealing jobs from the US. This surely has caused some concern in the IT industry as a significant portion of the revenue it generates comes from the US. Together with Brexit and a general slowdown of Western economies which has resulted in lower IT budgets for companies, the US President-elect with his very vocal statement of intentions presents a possible gloomy picture for the Indian outsourcing space. At 10.5% growth, the US is the leader amongst all geographies for Indian outsourcing. So the risks are high. The following points might help clear the picture a little.

There can be multiple ways of controlling workers from other countries.

• Increasing the minimum salary for H1B visa holders
• Increasing the processing fee of the H1B visa
• Imposition of high taxes on the import of products

Given that a great number of Indians and other foreigners employed in the US are on H1B visa, it would mean a substantial cost escalation for all companies.This rise in cost would be incorporated into the product prices and the American public will eventually have to pay for the increase in the cost of visas and higher taxes.

There are other aspects to why an impact on Indian outsourcing seems unlikely.

• The STEM labour market is heterogeneous. There are both shortages and surpluses of STEM workers, depending on the particular job market segment.
• In the academic job market, there is no noticeable shortage in any discipline. In fact, there are signs of an oversupply of PhD’s vying for tenure-track faculty positions in many disciplines (eg, biomedical sciences, physical sciences).
• In the government and governmentrelated job sector, certain STEM disciplines have a shortage of positions at the PhD level (eg, materials science engineering, nuclear engineering) and in general (systems engineers, cyber security, and intelligence professionals) due to the US citizenship requirement. In contrast, an oversupply of biomedical engineers is seen at the PhD level, and there are transient shortages of electrical engineers and mechanical engineers at advanced-degree levels.
• In the private sector, software developers, petroleum engineers, data scientists, and those in skilled trades are in high demand; there is an abundant supply of biomedical, chemistry, and physics PhD’s; and transient shortages and surpluses of electrical engineers occur from time to time.
• The geographic location of the position affects hiring ease or difficulty.

Whatever the truth, the fact is companies like Google, Microsoft, Facebook have been lobbying for being able to employ more workers under the H1B visa. And this would take some time to change even if the new president decides otherwise.

Also, the cost of operations is a big factor. Unless there are major changes in the labour laws in the US and that labour cost becomes more competitive, it would be difficult to stop businesses from seeking out cheap labour in India, China and other countries. There would be political fallouts of such changes in the labour laws which very few administrations can ignore.

Also, there has always been a difference historically between campaign promises and what actually gets translated into policy. The outgoing Obama administration also made similar poll promises of curbing foreign labour, however, much of that remained only as campaign talk. Donald Trump is too good a businessman not to understand the economics here.

Finally, there is the controversy around Melania Trump’s statement that she too held an H1B visa as a model to get work in the US. The President might want to give the whole issue a rethink.

Lost in thought on the future of outsourcing, I was rudely nudged back to my DeMon reality; my colleagues in the queue behind urging me to move forward. My reverie around the November 8 developments has to stop. What happens in the world of outsourcing is in the future; my present urges me to take the cash out of the ATM for my auto-ride back home (not enough currency for the cab). I move one step closer to the ATM.