Donald's America First policy will send more work offshore to India.
Donald Trump and Mike Pence, aka Donald & Mickey, are, as we are all aware by now, intent on 'America First' and on tackling the perceived injustice to it's indigenous people of foreigners taking their jobs. Not quite as well publicised as The Wall is the proposed bill which intends to reduce significantly foreign staff being brought in on H1-B visas, aka working visas. Since India is the most rapacious consumer of working visas in America it stands to suffer a huge blow to its outsourcing operations.
Whats in the bill?
Currently to qualify for a H1-B visa the sponsoring company, Infosys/Wipro/TCS etc, must pay the workers at least $60,000 which happens to be the current median salary of all US systems analysts. Assuming the 'High-Skilled Integrity and Fairness Act of 2017' bill goes ahead, outsourcing companies will need to pay their staff $130,000/year. In addition any exemptions for those holding masters degrees will disappear and the lottery style fashion in which work permits are allocated may become market-based, meaning the greater the salary the more likely one of the annual visas, currently limited at 80,000, will be granted. If Infosys paid $130,00 to its current 25,000 h1-B visa holders then its operating costs would increase by $1.3 billion.
US outsourcing is dead, long live offshoring.
There is a large and well voiced body of evidence and theory showing that offshoring or outsourcing from India et al is not only ethical, beneficial to the countries consuming the outsourcing but also necessary for their growth. Assuming that the Donald will regardless steam on ahead all is not lost for Indian companies that outsource to America. Quite the reverse! US corporations will just be persuaded to send more work offshore to India. With the trend to cloud based systems, remote working and automation there is not the need there was for physical bodies in offices. After all a large number of Americans (reports range from 20% reported by GlobalWorkplaceAnalytics.com to the, in the spirit of fake news, 45% reported by Betanews.com) now regularly work from home so why bring employees 7729 miles from Mumbai to Seattle? "Im going to build a virtual wall and India is going to pay for it" might be the Donald's rallying cry for his second term.
Business models needs a jump start from time to time and this will simply move the work offshore where companies pay a fixed, much lower rate, for the same resource without the significant additional expenses of a person parked in their office. The model of 'virtual employees' is well utilised and tested in the US and elsewhere where currency variations have always favoured redistribution of wealth. Liberals take note the inference that outsourcing to India et al is an act of moral rectitude. Another box ticked.
Ironically, N.R. Narayana Murthy, the president and co-founder of Infosys Limited, said in an interview last Thursday (02/02/2017) that US companies should start to hire locals to do the work after the bill is passed. Perhaps Mr Murthy is calling the Donald's bluff but it is inevitable that US companies will, well before the bill is passed, start mitigating the inevitable and simply send more work offshore to India.
News brought to you by ESG, "outsourcing without the headache". Contact us today to offshore IT and outsource business processes