Challenges before India’s IT industry

Author: 
G. Srinivasan

The Trump Administration of the United States (US) is bent upon a hot pursuit of unilateralism on the trade front, refashioning its extant trade laws to “Make America First”, ignoring its post-war avowed commitment to bolster multilateralism and rule-based model for conduct of commercial engagements. Besides showing scant regard for reviving Doha Development Agenda of the World Trade Organization, it was able to make the WTO conform to its own agenda by getting Trade Facilitation Agreement (TFA) accepted by all members of the WTO sans much ado. In fact at the very first ministerial meeting of WTO in Singapore way back in 1996, TFA issue was opposed by many members including India which now got ratified by a majority of WTO members with New Delhi too abjectly surrendering. 
Undoubtedly, barriers to export of merchandise goods both tariff and non-tariff, particularly the latter in advanced nations had multiplied despite WTO policing the global trading regime. But the services sector which has of late emerged as a crucial savior to emerging economies like India in the trade front also risks confronting its murky moments of comeuppance before long. It needs no mention that India’s technology and business service industry is the most dynamic in the world as India is home to an abundance of software skill, unmatched in any part of the world being offered and constantly honed by its technical educational institutions, some of which rank high in the global arena. 
From offering basic information technology (IT) services when it began rather unobtrusively in the 1990s, the Indian tech industry has shaped ahead swiftly to offer functional IT later in the 1990s and enterprise resource planning (ERP) and productivity software in the early 2000s. Besides earning handsome foreign exchange and helping to relocate young and intelligent Indians in the overseas mostly in the United States and in the United Kingdom,  IT industry has become a linchpin in the wheels of the domestic economy too as it absorbed skilled personnel by providing employment outlets in the real sectors of the economy.
The importance of Indian software personnel as service providers by moving and relocating themselves to the location in which their service is sought to be gainfully employed can hardly be gainsaid. But a reality check reveals that when NASSCOM talks about 90 per cent Indian skilled personnel, it largely speaks about those who have been flocking to the US and to a much less extent to the UK, with other European countries not demonstrating any iota of interest to give them  permanent residency lest their local population should react otherwise. With nationalism emerging as a battle cry even from multicultural  place like Britain which had seen the drama and trauma of its exit (Brexit) from the European Union in a referendum last June, the scope and hope for other insular European countries in taking skilled personnel under the WTO category of Mode 4 of the so-called services negotiations look tenuous with the WTO itself facing an existential threat as a few puissant members displaying their open disdain for its advocacy of multilateralism.
With the influx of those settling in the US and those constantly seeking to settle their remaining ceaseless, the pressure on IT firms to cater to the clamant demand, regardless of the repercussions this might spawn, also mounts.  It is against this backdrop that the US President Donald Trump and members of Congress from both parties have promised to overhaul the visa programmes used by firms to bring overseas workers to the US. A measure of their concern is reflected in the fact that in the current (115th)Congress,  as many as four bills pertaining to H-1B and L-1 visa programmes have been introduced by individual congressmen and senators. They include, among others, the “Protect and Grow American Jobs Act” Bill by Congressman Darrell Issa on January 5, 2017, the “High-Skilled Integrity and Fairness Act of 2017” by Congresswoman Zoe Lofgren on Jan 24, the “H1-B and L-1 Visa Reform Act of 2017” by Congressman Pascrell Jr on March 2, besides another Bill “H-1 B and L-1 Visa Reform Act of 2017” by Senators Chuck Grassley and Dick Durban on Jan 20.
A notable move made at the end of last month when USCIS department set forth guidelines making it harder for companies to bring foreign technology workers to the US using H-1 B visa tack. It further announced that it will begin accepting H-1 B visa petitions for fiscal year 2018 (beginning on October 1) on April 3, rejecting all cap subject H-1B petitions filed before April 3, 2017. It has also kept in abeyance all premium processing for this visa till the start of the fiscal year on Oct 1. It is against this avalanche of changes abruptly introduced that Indian techies and IT firms need to evolve strategies.
Prof. Ajay Shah of the National Institute of Public Finance Policy (NIPFP) put forth a novel proposal, stating that instead of sending our engineers to the sites the time had come to make an alternative model of taking the work from the foreign companies and executing it here leveraging the vast talent pool and providing plentiful opportunities to other skilled people to share the bounty. This means the extant body-shopping model needs to be scrapped and the pie of the cake of foreign assignment widely shared with all the requisite skilled personnel here and augmenting their income too. With export opportunities for merchandize goods shrinking due to global economic slowdown and laggard recovery, the opportunity for utilizing services exports cannot be lost too by sticking to the so-called rights and claims for our people when none exist in reality. (IPA)

Saturday, 8 April, 2017