Curbs on outsourcing may hit U.S. economy: Nasscom

In the four-year period between 2011-15, Indian IT industry paid $20 billion in taxes to the U.S.

In the four-year period between 2011-15, Indian IT industry paid $20 billion in taxes to the U.S.

India’s IT industry has warned about the adverse impact that curbs on outsourcing will have on the U.S. economy, which lacks high-skilled workers.

The country’s premier trade body, Nasscom, will be taking a delegation to the U.S. in February in an attempt to reach out to the new administration. U.S. President Donald Trump had promised to follow a ‘Buy American, Hire American’ policy in his inaugural speech on January 21 in Washington.

“The critical thing for this industry is high-skilled workers and the fact of the matter is that those high-skilled workers are not available in the U.S… If the agenda of creation of jobs needs to be pursued, we feel that current windows will need to be kept open to get the requisite skilled workers,” R. Chandrasekhar, president of National Association of Software and Service Companies or Nasscom told The Hindu.

Mr. Chandrasekhar said that the Indian IT industry provided services to American companies, which helped them to be competitive in the global market.

“In the U.S., the job creation engine is only corporate America. There is no other way that U.S. economy can generate jobs. And therefore, to keep corporate America fighting fit, ensure that it remains globally competitive, ensure continuous increase in productivity, these services are needed. If you need these services, you need skilled people.”

More than 60% of the Indian IT industry’s $108-billion export revenue comes from the U.S.


Short-term impact

Sanjeev Bikhchandani, Founder of Info Edge, said there may be a short-term impact, but in the medium-term, businesses could actually grow.

“There is huge inter-dependency between the U.S. and the Indian economy. The economic logic for U.S. companies to work with Indian IT companies is compelling and the bonds are strong. There may be some marginal rebalancing but I expect business to go on and actually grow in the medium-term,” he said.

Citing an example, Mr. Chandrashekhar said that an Indian IT company which tried to hire people in the U.S., had interviewed more than 4,000 people but could hire only about 20. “These facts have been shared with the authorities. It’s not that they not qualified, but are not qualified with the skills that are needed,” he said.

According to December 2015 projections by the U.S. Labour Department, employment of computer and information technology occupations will grow 12% from 2014 to 2024 (faster than the average for all other occupations).

However, due to shortfalls in college graduates in science, technology, engineering and mathematics (STEM), entering the STEM workforce, there could be 2.4 million unfilled STEM jobs in the U.S. by 2018 — with more than half of these vacancies in computer and IT-related skills.

Foreign students

The Nasscom president said even in colleges and universities in the U.S., more than 50% of the students are foreigners in STEM courses. “So, even if you want to hire people from American universities, you can only hire them on visa because they are foreigners as well.”

On creation of jobs in America, he noted that the Indian industry hires a lot of people, including Americans.

According to a 2015 report, the industry had created more than 4 lakh jobs in the U.S., including 150,000 direct employment positions.

Mr. Chandrasekhar highlighted that the problem is “discriminatory”, referring to provisions implemented by the U.S. to curb immigration of high skilled workers.

“The restrictions which were imposed in terms of higher cost of visa is applicable only to so called 50-50 companies, which is actually only the Indian companies. So, the definition has been crafted in a way that only Indian companies get affected and even some of the other bills which have been introduced are only targeting so called 50-50 companies.

“If, for a moment, we hypothetically (accept) the argument that one visa worker coming in is displacing an American worker, which is not true… then how does it matter if the person comes from company A or company B? If you say it is all right for company A to do it and not right for company B to do it, then the argument itself is invalid,” he said. He also pointed out that Indian companies actually account for little over 15% of H1-B visas issued.

Coordinated approach

Asked if Nasscom would reach out to the new administration, he said: “We will;, these issues need to be projected and shared with the new administration. All the members of the new administration or the lawmakers may not be familiar with all aspects. We will go to the U.S… we are planning to take a group in February to put across these perspectives to the new setup,” he said.

Last year, seeking to assuage some concerns expressed by the industry over the outcome of the U.S. Presidential elections given President Trump’s anti-outsourcing posturing during pre-election campaigns, Electronics and IT minister Ravi Shankar Prasad had said that the Indian government would “respond” in a coordinated manner in case the new administration takes any decision that has potential bearing on the sector.

“…if certain issues come (up), the matter will be taken up at the Government-level where, the IT Ministry, Ministry of Commerce, and Ministry of External Affairs..., all the three have to work in coordination,” the IT minister had said.

He had further pointed out the Indian IT industry’s investments in the U.S. were to the tune of $2 billion between 2011-13 and in the four-year period between 2011-15, Indian IT industry had paid $20 billion in taxes.

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Printable version | Jul 1, 2022 11:08:34 pm |