India’s fears over the impact of Donald Trump being US president – the country accounts for the lion’s share of Indian IT services exports – became a reality this week. US Citizenship & Immigration Services (UCIS) has announced a suspension of “premium processing” of H-1B visas from April 3.
Microsoft, Google, and Amazon are among the tech giants that have criticised the move because of its impact on their business. But Indian IT giants like Infosys and Wipro will feel its effects, too, because they relied on H-1B visas to move workers quickly and temporarily to the US when projects came up.
India’s IT services companies are affected, in particular, because their requirements fluctuate. And it costs much less to maintain workers in India and move them to the US only when the need arises
The scale of its impact will be substantial on a country that accounts for more than half of the world’s outsourcing.
US tech companies, too, will feel the pain. They have used the H-1B system to reduce costs and improve efficiency, apart from gaining valuable talent. Three-quarters of Fortune 500 companies use Indian IT services.
The Indian IT industry will be hoping that pressure from US tech companies will eventually prevail over Trump’s political rhetoric against foreign workers.
Reversal of brain drain
Some in India see a silver lining in this for India, which has suffered a brain drain to the US for decades. The brightest minds from India’s premier engineering colleges have gone abroad to work for American companies as they did not find suitable opportunities in India.
Tech students are increasingly choosing to stay in India, the world’s fastest growing large economy with an emerging startup ecosystem. The shootings of three Indian techies in the US over the past couple of weeks has accentuated the sentiment.