Day 51 – Q 1. What impact does the change in US immigration policy have on India’s IT sector? Examine.
1. What impact does the change in US immigration policy have on India’s IT sector? Examine.
अमेरिकी आव्रजन नीति में परिवर्तन का भारत के आईटी क्षेत्र पर क्या प्रभाव पड़ा है? जांच करें।
Introduction:
USA, under the new administration, has been changing its immigration policy under its protectionist measures calling for an America First approach in its economic services.
Body:
Stats:
- Out of the total visas, 70 % is being consumed by top Indian MNC companies to cover the IT services.
- Indian IT industry contributes to about 4 lakh direct and indirect jobs in the US, contributing for about USD 5 billion in taxes annually. Nearly 60 percent, or about 65,000, of the total H1B visas are issued to Indian contingent, mostly in the IT sector.
Changes:
- The lottery system could be replaced with new selection method which would allow only the “the best and the brightest” as beneficiaries of the programme. It includes change in the manner visa is allocated between Indian employees of IT firms and Indian students with a US degree, favoring the latter.
- Increased salary eligibility for H1-B visas.
- Spouses of H1B visa holders could lose their permit to work.
- Reserve 20% H1B visas allocated annually for firms that have 50 or fewer employees.
Negative Impact:
- Reduced employment in India- The hurdles in immigration will prompt companies to outsource less work to India. It will hamper employment in India.
- Reduced employment of Indians- It might reduce the employment prospects of skilled Indians in the US.
- Affect profitability- It will add more pressure on India’s software services industry in terms of profitability and revenue. To sustain the same level of profits IT companies will be forced to look towards other regions which will require additional investments.
- Impact on service sector- may force IT giants to make fundamental changes in their strategies in terms of hiring, salaries, jobs etc., thus impacting the service sector.
- Inward Remittances from the US : The policy might impact jobs of many Indians, which will eventually result in loss of inward remittances from these people and finally will reduce USD reserves too.
Positive impact:
- Brain Drain can now be converted into brain Gain, as many IT professionals will be working in India only
- IT companies now need to shift their business model from labour cost as the fundamental source of competitive advantage to augmenting Research & Development and improving Intellectual Property.
- If Indian companies invest in other regions it will lead to stable profits as the business will be spread, minimizing the risk.
- India’s ambitious plans of Skill India and Digital India will get a push as more skilled manpower will be available for training.
Conclusion:
India’s contribution to US economy has been no less significant in terms of taxes paid or students educated. Instead of getting bogged down by foreign policies, Indian IT companies should now diverse their focus to areas like localise and near shore business, leverage new technologies—artificial intelligence, automation, telepresence and augmented reality etc. The Indian IT services should now seize the opportunity to transform and they shall be perceived not as “Indian” or “body shops,” but as global technology giants that don’t need visas to succeed.
Best answer: NKY
