Impact of visa tangle on software business

Mrinal K Biswas

Whether information technology industry is set for a course of boom to blur is the current angst for India. The spectre of restrictive H1B visa policy by the US and the creeping disruption technology are the twin threats that put a great strain on India’s $150 billion IT industry.
Whether there will be a sigh of relief because of bold predictions by the software association of 1.3-1.5 lakh new jobs in 2017-18 period along with 10-11 per cent domestic revenue growth backed up by 7.6 per cent rise in exports last year is under country’s keen watch at present. According to National Association of Software and Services Companies (Nasscom) chairman R Chandrashekhar, this industry faces continued headwinds from the US market.
The Indians mistakenly hoped that Trump-Modi meet last June-end would untangle US threats of putting a stop of a free run of Indians in the US software and services sector. The subject was not there on the discussion table of the two leaders because Prime Minister Modi was aware of US President Roland Trump’s sensivities on foreign workers flooding the US job market, particularly in the IT industry.
The Indians working or will be working in the US under optional practical training (OPT) falling within science, technology, engineering and medicine (STEM) category have come under the Trump administration’s critical review, to the consternation of India’s ever expanding middle class who wish to move to the land of opportunity with their knowledge-based education. There is a fear that the new administration will be heavy-handed and cut down present strength of STEM workers and severely limit new admissions with strings attached. At present, US issues 85,000 H1B visas each year--65,000 to foreign workers and 20,000 foreigners just graduated from US universities. In 2015, some 64 per cent of this H1B visas were issued mostly to Indian IT technocrats who are employed at greatly reduced pay by American standard.
The US administration and law-makers worried at lack of jobs for eminently employable Americans in the STEM sector because of availability of cheap immigrant workers seem determined to clamp down on foreign workers for whom Donald Trump stands steadfast. At present, visa-holding knowledge workers earn $60,000 annually against the normal pay of $130,000 for an American in that field. Trump appears to insist that the eligible aliens must be offered a shade higher than the normal pay to show that it is worth paying because there is not enough qualified Americans to take jobs in that sector.
Similarly LI visas, which US State department issues to high-skilled foreign workers for transfers to the US after they work in American companies abroad for some period. It is found that in 2011, some 25,898 of the 44,820 LI visas issued went to the Indians. These two types of visas are issued for a maximum period for seven years for executives and managers and five years for others. Business process outsourcing (BPO) is another mechanism, under US close watch, through which American companies outsource large volume of work at less cost to Indian companies like Infosys, TCS.
It is still an open question how the US administration will act after reviews of the current issue are placed on the table of Trump. It is almost certain that the present leeward of the Indian IT industry in particular will cease to exist in the new order of things. In that event the Indian IT industry may go downhill, because our IT sector is sustained chiefly by its marketability in the US and Western Europe, the latter also showing signs xenophobic tendencies. Our globally acknowledged software expertise is   the mainstay of our services sector which command 55 per cent share of the national economy (agriculture holds 18 per cent, industry 27 per cent). A diminution of this strength will affect hard India’s thriving middle class.
It is not that gloomy, says Nasscom. Infosys claims that revenue growth in constant prices last year (2016) was 8.3 per cent, which was the fastest in the industry, despite various headwinds. But increasing automation is giving pain nevertheless. The onset of disruption technology is playing havoc and has severely disturbed the survival instinct of the existing software business in India and abroad.
Indian IT is inadequately equipped to cope with the oncoming disruptive technology which is basically innovative in nature. There will be some of the most innovative and evolutionary disruptions we will see with more connection, more automation and with more significant impact in business and investments. Finance will be automated, big data will get even bigger, the internet of everything begins, mobility will continue to dominate and the like. Indian engineering institutes are turning out large number of IT technocrats but with little knowledge of disruption technology. It is feared that some 80 per cent of them will be unfit in the new scheme of things. Some 65 per cent of the existing IT technocrats are unable to acquaint themselves with it and are bound to lose jobs. They are at best cybercoolies and expendable. Indeed, Infosys has “released” more than 11,000 jobs last year because of automation. The little known HIS Research projected that India is set to lose 6.4 lakh low-skilled positions by 2021 because of intensified automation and disruption.
It is not only visa problem for the budding IT technocrats the disruption technology is the bane for new and existing technocrats as well. The software business as a whole is at a crossroads.

Tuesday, 11 July, 2017