Editorial

Infosys, trumped: Case for free trade must not be given up

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As IT companies adapt to new visa regimes, the case for free trade must not be given up

Infosys’s decision to hire 10,000 local workers in the U.S. has caused concerns over the impact of President Donald Trump’s restrictive visa policy for skilled workers. Explaining the move, Infosys CEO Vishal Sikka said it is purely a business decision focussed on building the company’s capabilities in fields such as artificial intelligence and cloud computing. Indian IT companies have been under pressure to adapt nimbly to the restrictive visa regimes being put in place not just in the U.S. but also in key markets such as the U.K. and Australia. As a matter of fact, these companies had been gearing up to become visa-independent even before Mr. Trump’s rise to power. In 2015-16, for instance, Infosys hired 2,144 people in the Americas, increasing its workforce in the region by over a quarter. In 2016, Tata Consultancy Services, another IT giant, made only about 4,000 U.S. visa applications, compared to about 14,000 a year before. The trend is likely to only strengthen. Not surprisingly, there is now increasing speculation that many Indian IT giants will refrain from sponsoring H-1B visas for junior engineers. The exact impact of Mr. Trump’s immigration stance on overseas hiring is difficult to gauge. Going by the numbers, the plan to hire 10,000 local employees looks significant compared to Infosys’s current foreign workforce in the U.S., which is estimated to be in the range of 20,000 to 30,000.

Yet, while individual companies adapt to the new political economy in the West, it does not diminish New Delhi’s responsibility to make a case for more open immigration policies for India’s skilled workers. The economic rationale behind the free movement of labour is that it promotes economic efficiency. This, as economists from David Ricardo to Jagdish Bhagwati have pointed out, increases the size of global economic output despite the costs. It is obvious that the tightening of immigration is likely to have a net negative effect on the global economy. Also, investment in advanced technologies itself, such as by Infosys, could be a measure to deal with high labour costs in the U.S. Artificial intelligence has already helped IT companies cut labour costs. In any case, job losses owing to automation are likely to accelerate, which is of course not an issue that affects the IT sector alone. While putting forward the argument that they create thousands of American jobs makes business sense for companies such as Infosys in their most critical market, it runs the risk of bolstering the narrative against the free movement of labour across borders. Sadly, since the benefits of globalisation are diffused among billions of people while its costs are concentrated on a smaller but organised group, such adjustments often end up validating populist, protectionist policies.

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Printable version | Jan 29, 2020 10:32:28 PM | https://www.thehindu.com/opinion/editorial/infosys-trumped/article18378973.ece

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