protectionist wave impact on indian it industry

Ever since Donald Trump became the President of the United States (POTUS), one question that has been doing the rounds in India is how will its information technology (IT) industry work. Ever since he was campaigning to become POTUS, Trump has been a major opponent of outsourcing, which is something that the IT industry of India thrives on. In fact, as far as the leaders of this industry are concerned this is a burning question to say the least. At his first address as POTUS, the rallying cry of Trump was “buy American, hire American”. As far as the IT industry is concerned India happens to be the biggest provider of outsourcing services.

How big is the market in India?

In all, the market for IT outsourcing around the world is valued at approximately 130 billion dollars and India itself accounts for 70 per cent of the same. It is said that the IT industry in India employs around 10 million people – easily the biggest with regards to the service sector. This includes the business process outsourcing (BPO) industry that primarily performs back office operations, data transcription services, and call centres. Apart from this, the IT industry has also been at the forefront of the economic transformation of India and changed the very perception of India as a business destination and the role it can play with respect to the global economy.

Is the future uncertain?

During the 18 months that he spent campaigning and promoting himself as a presidential candidate Trump was always saying that he wanted to bring jobs back to the US. This also meant reduction in immigration as well as changing the off-shoring policies so that outsourcing could be curbed. As far as experts are concerned, this constant emphasis of Trump on protectionism is not good for global trade and markets and it could very well have a bad effect on the IT industry in India.

H-1B visas

Even after Trump had become POTUS he had stated that doors would still be open for skilled immigrants in the US. There was some optimism following such a proclamation but ever since US Citizenship and Immigration Service has poured cold water on all the expectations with changes to rules that are applicable for fast-tracking  H-1B visas. As far as the IT industry in India is concerned, it is the main thing and any changes on this front can only be bad news for one and all.

US Government has stopped premium processing of these applications. This process normally allows these applications to be fast tracked and also costs 1100 dollars more. Lawyers in the industry have said that as it is they have themselves started to avoid fast tracking of late considering how costly it has become. Apart from protectionism, technological changes – they seem to be gathering pace quicker than the wave of protectionism itself – are posing major challenges for the industry. Now, the question that remains to be asked is will India be able to cope with these huge challenges that seem to have coincided in such an unfortunate manner.

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