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With Growing Protectionist Sentiment, Indian IT Service Providers Face A Bumpy Road Ahead

January 20, 2017, will mark the commencement of the four-year term of Donald Trump, the 45th President of the United States. Since his presidential election win on November 8, 2016, many quarters of the global industry have been abuzz with possible outcomes of the protectionist sentiment in the US – a key pillar of Donald Tump’s campaign. Here’s what we at Greyhound Research, the Technology Transformation Research & Advisory arm of Greyhound Knowledge Group, believe will be the impact on the Indian IT Services firms.

Greyhound Standpoint

At Greyhound Research we believe Trump administration’s first focus will be on manufacturing jobs, hence China. However, Indian IT firms will not remain completely insulated – BPO and call centre jobs requiring relatively lower skills – also the prime candidates for automation by the way of bots – can expect to be affected in square focus. At the same time, better-skilled jobs including coding and maintenance are likely to remain unaffected given their scarce availability and exclusivity.

Recent news goes to show that Indian IT Service providers are panicked with the overall protectionist sentiment in the US and are wanting to ensure that possibly nothing acts as an eyesore with the regulators and the newly appointed Trump administration. For reference, only recently Wipro decided to pay US$ 5 million and settle a six-year-old investigation with the US Securities and Exchange Commission (SEC). In another instance, Infosys announced a sudden exit of its General Counsel and Chief Compliance Officer, David Kennedy with aggregate severance payments of US$ 868,250 along with reimbursements for COBRA (insurance) continuation coverage over a period of 12 months.

Given the current sentiment, in 2017 we can well expect Indian IT Service providers to use multiple channels including both US-based and Indian lobby groups, media houses, open forums and university programs to engage with the Trump administration. At Greyhound Research we believe while such initiatives will definitely help further strengthen the ‘Brand India’ story, Indian IT Services providers can well expect fresh pressures like visa restrictions, need for increased US investments and reduced number of BPO contracts (and others that do not require specialised skills).

In the midst of all this, it’s critical to remember that most US-based companies (including many Fortune 500s) are deeply invested (and dependent) on Indian IT Service providers and neither they nor the Trump administration is in a position to make drastic changes. Albeit Donald Trump can be expected to put the onus on visa restrictions over the coming years, no short-term changes are plausible.


Analyst(s):

Sanchit Vir Gogia: Sanchit is the Chief Futurist, Founder & CEO of Greyhound Knowledge Group, a Global, Award-Winning, Digital Transformation Research & Advisory Group. He also serves as Chief Analyst & CEO of Greyhound Research, an Award-Winning, Global, Independent Technology Transformation Research & Advisory firm. To read more about him, click here.

Anshoo Nandwaani:  Anshoo serves as a VP and Principal Analyst with Greyhound Research, an Award-Winning, Global, Independent Technology Transformation Research & Advisory firm. She also serves as Chief Human Resources Officer (CHRO) of Greyhound Knowledge Group, a Global, Award-Winning, Digital Transformation Research & Advisory Group. To read more about her, click here.


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