Time for IT companies to rethink their core business strategy
US President, Donald Trump issued a stern warning to India that the H1-B visas could be suspended sooner rather than later. These visas have been the bone of contention for a long time.
Why a bone of contention
Among the various classes of visas issued by the US, the most popular is the H1-B visa. This is the visa that most of the IT companies like TCS, Wipro, Infosys and HCL Tech use aggressively. H1-B visas are used by IT players to send engineers abroad for executing projects onsite. The problem is India accounts for 70% of H1-B visas issued by the US each year. Trump’s view is that India was sending low end skills under the H1-B visa which is basically meant only for highly skilled workers that were in short supply in the US. This was taking away American jobs.
COVID-19 aggravates the scene
The latest announcement by Trump is most likely triggered as a response to the COVID-19 syndrome. The US Fed has estimated that US GDP growth will contract by 6.5% by the end of 2020 while the unemployment level would touch an intimidating level of 9.5%. Trump needs to answer for these job losses and with an election coming up later this year, he needs a story. H1-B visa ban provides an answer to all these problems. It keeps Americans happy and also pushes India to a corner.
Time to focus on offshore
When the visa ban issue was first raised by Trump in 2017, Anand Mahindra had called it an opportunity in disguise. According to Mahindra, restrictions on H1-B visas would force the Indian IT industry to closely evaluate the offshore opportunities. That means; Indian IT companies handle global customers by creating offshore support centers in India that can almost replicate onsite experience. With improved telecom services and superior bandwidth, Indian companies can actually replicate the onsite experience. Cloud technologies can help to handle the data seamlessly from any part of the world. That could be the road ahead for Indian IT and the early bird would take the worm.
Look beyond outsourcing
It is not like Indian IT companies are not working towards this goal. In fact, the bigger IT companies like TCS and Infosys have already begun a conscious shift out of traditional BFSI into newer emerging segments like social media, mobility, analytics and cloud. These are the big growth areas and most of the IT spends are happening in these areas only. If you look at the $10 million clients that IT companies are adding, this trend has already begun. The big challenge for Indian IT will be to create the necessary skill sets and training modules to sustain leadership in digital. That would be next on the agenda!
