HOW GOOD IS DONALD TRUMP FOR INDIAN IT & OUTSOURCING SECTOR?

Yes, it’s finally out there so you better rip it off quickly like a Band-Aid and accept that Donald Trump is the President Elect. There was a lot of noise among certain sections in India and Indian Americans in favor of Trump, however that had little to do with his fiscal policies. The question is what will his ascent to the proverbial throne mean to India and especially the IT sector.

If we go with real numbers, Indian economy depends a lot on its IT services that are outsourced from US to India, which stands at a staggering $150 Billion annual revenue. This also implies that every year there are millions of Job being outsourced to India in IT/ ITES and outsourcing sector. The bigger problems America is currently facing are high unemployment, lower wage pay scale and a crippling middle class. Couple this with populist and anti-establishment rhetoric and you have a winner, Donald Trump.

Donald Trump, who promises to bring the American economy back on track and getting Americans full employment by claiming “America for Americans” does not sound reassuring for India. This is where the problem might arise for the Indian IT or Outsourcing sectors. Those following his campaign closely are a skeptic of what the future may hold due to his position on some important issues like-

H1-B Visa

There are millions of Indian workers in the United States, who go there and work on the temporary H1-B Visa, after which they can attain permanent residence in the country or return to India. As per Donald Trump’s promise he would either cancel or impose extremely strict regulations on H1-B visa.

This would be detrimental to Indian IT companies with overseas office who would be unable to call their senior management to US for projects.

Taxation

The taxation rhetoric on the companies that choose to outsource is a major threat that affects both the US based companies, as well as the Indian Outsourcing sector. Trump claimed in his campaigns that he would levy 35% tax on the companies that choose to do so. That is, move their business overseas. However due to a dwindling ratio of talent v/s companies, many SMEs are forced to move overseas or hire multinational talent.

He also promised to reduce taxation to 15% on those companies that agree to move their entire business back to US. We can make a calculated guess but the repercussions may be well beyond out analysis.

Why So Serious?

If there is one thing that you learn from watching successive election campaigns for years is that you understand how one should never take a candidates’ pre poll promises too seriously. A lot of it is rhetoric, which even if the candidate is speaking earnestly, usually doesn't see the light of the day.

So yes, caution must be exercised, but not pessimism. Trump being a businessman himself must have some semblance of empathy for the problems in industrial sector and would be willing to find an amiable solution for both the parties. Because if such extreme measures are carried out, they could prove detrimental to American Economy itself and hence, could be opposed by many in American industry.

What makes Indians so successful is their adaptability for they can easily adjust to tectonic shifts in policy or government. India is known as a country of IT geeks and of affordable intelligent manpower. So without being overly pessimistic, have a pragmatic approach and be ready to put in your best efforts, as always.