The Return of the Trump: Implications for Indian IT

It’s a done deal that Donald Trump will be the new occupant of the White House as the 47th President of the United States. Over the last few months, the US presidential campaign had all the trappings of a Hollywood blockbuster with its share of drama and theatrics from both the contenders- Trump as well as Harris.

But in the end, numbers matter and Trump riding high on the Make America Great Again (MAGA) narrative polarised in some cases and galvanized the American voters, who were caught between issues ranging from immigration to employment to healthcare and inclusivity.

As we look beyond the geopolitical ramifications, for India, the immediate question the tech community here is pondering is what impact it will have on the Indian outsourcing industry. Let's try and unpack, the good, bad, and ugly scenarios.

Prepare for Headwinds

The US-centric Indian IT outsourcing industry certainly needs to brace for impact. The America First mindset Trump aggressively evangelizes is not just for IT, but he wants USA to redeem itself as a manufacturing powerhouse. He does not subscribe to American jobs being offshored. While it will take a while for the ramifications to sink in, one can expect heightened scrutiny and tightening on the US Visa programs, specifically on the H1B Visas, which are critical to Indian IT placing their employees in onsite projects in the US and India has always consumed a greater share of H1B visas.

While Trump will not be able to put a country-wide cap on H1B visas, he will make it difficult to get the visas by introducing tighter scrutiny. This will automatically put in a layer of filter.

While Visa is one aspect, if Trump mandates companies to have equal and fair representation in terms of demographics and asks outsourcing companies to recruit local talent, it might be a game changer. While this narrative has been going on for some time, one can expect Trump to engineer some kind of regulations mandating hiring more locals in the tech workforce. In that possibility, Indian IT outsourcers need to hire local talent and in that case, it will impact their cost per employee, as hiring local talent will be expensive onsite.

Yet another source of concern is Trump can ask enterprises in America to have a cadence with local tech companies instead of foreign IT service providers. But yet again this is a grey area, and these can first start with evangelization and ultimately create a challenging environment for outsourcing companies.

So Indian It companies certainly need to reinvent themselves for the Trump regime and elevate their game by offering value-added services and niche services for which local talent might not be available.

The silver lining here is, that Trump shares a great camaraderie with PM Modi here and that will act as an equalizer in having healthy diplomatic and trade ties between the two countries. These are still early days, but the leadership in top IT companies will already be on the drawing boards looking at derisking strategies and navigating the return of Trump and the near and long term impact.