Donald Trump's Win: What It Means For Indian IT?

by CXOtoday News Desk    Nov 10, 2016

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The USD150-billion Indian IT industry is facing uncertainty as Republican candidate Donald Trump gets elected as the new president of the US, the country which accounts for around 60 percent of India’s software exports.

The IT sector’s apprehension comes from the fact that Trump had earlier said the Americans are living through the greatest job theft in the history of the world, saying the companies are moving out jobs from the US to countries like India, China, Mexico and Singapore. 

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The Indian IT sector is already facing multiple challenges — from a shrinking revenues for its traditional services business, and increasing competition to narrowing margins. Now, if companies in the US are forced to limit outsourcing, there may be a bigger risk for these companies, believe experts.

India at risk?

“Indian IT sector must now brace for further troubled times ahead,” Arup Roy, Research Director, Gartner commented on IT sector’s fate under Trump’s regime, adding that a sub 10% growth for FY2017 is certain, with Trump administration adding to the industry’s woes.

Roy expects Trump administration’s protectionist views would have further dampening impact on growth prospects, if the views were to crystalize into some serious policy implementations. However, what happens during campaigns and what actually transpires in office can vary greatly and we did get early signs of that in his victory speech, but at minimum it is headline risk and adds to the uncertain times.

The other risk is that more countries may get protectionist now, said Pareekh Jain, Research Vice President (Engineering Services), HFS Research. Last week, for instance, the UK increased the salary threshold for visas to discourage entry-level immigration.

Read more: Brexit’ And It’s Meaning For The Indian IT Sector

American companies may also cut back on their discretionary spends because of uncertainty in the business. Already, with low interest rates and poor business sentiment, IT spends by US companies, especially in the financial services space, have fallen in the last few quarters.

An IT executive said on conditions on anonymity that Indian IT companies may now have to do some more local hiring, referring to countries like TCS and HCL Technologies who are already doing the same. The other Indian IT majors such as Infosys and Wipro, are already spending on several CSR initiatives in the US, besides brand building. Soon, the numerous others should follow suit.

No dramatic impact

Others however believe that Donald Trump’s victory in the US presidential election will not affect the sector.  They hope that President-elect Trump will adopt a balanced approach to high-skilled visas and contribution of India’s IT sector to the US economy

“We look forward to working with him and his administration to advance our two nations’ shared interests,” B.V.R. Mohan Reddy, former chairman Nasscom and founder and Executive Chairman of Cyient, told ET, “Contrary to some misperceptions and political rhetoric, India’s IT sector has long contributed to the US economy in more ways than one, Indian IT companies time and again helped them develop new technologies and new products, significantly benefiting those companies, their customers, American job growth and the US economy.   

“Thus we hope that, as the rhetoric of the presidential contest fades into the past, the Trump administration will make mutually beneficial trade with India a high priority, and will take a balanced approach to high-skilled visas and the contribution of India’s IT sector to the US economy,” he added. 

Creating a positive outlook, the Indian IT industry’s trade body, Nasscom, in a statement assured that Trump’s observations regarding outsourcing and high-skilled immigration “were based on fabrications put out by critics of the sector.” Nasscom said that it would be keen to engage with the Trump administration. “Our sector plays a key role in helping US businesses innovate and grow and make corporate America more competitive.”

A positive outlook

While it is too early to comment on Trump presidency, Indian leaders believe that Trump will bring a practical flavour to grow business ties with India and in turn a positive outlook indicated for the Indian IT industry.

L C Singh, Vice Chairman & CEO (Founder) at Nihilent Technologies feels the election result won’t have any significant impact on hiring in the Indian IT industry. “We welcome the verdict of the US presidential election and wish Trump the very best in his new journey.”

With the recent regulatory challenges that the US technology companies have faced in China, India automatically becomes the most preferred partner to grow the business as well as harness the new frontiers of technology.

Moreover, there has also been significant inbound investments in US tech majors and corporate companies in India to seize the power of the Indian knowledge workforce, and companies like Microsoft, Amazon, GE, Google, Uber, etc, have a significant presence in India. Together the US and India can explore a gamut of new opportunity in terms of technology.