Will Trump make a dent on the Indian IT industry?

By : Sandeep Gogia, Associate Director, Equirus Capital

Will Donald Trump’s presidency impact the Indian IT services industry? The India Inc., especially the IT sector, has been abuzz with this question and similar concerns over the Republican front-runner’s policies and public proclamations on issues like immigration, visas, outsourcing, etc. His campaign trial has been filled with high-pitched rhetoric against outsourcing, especially to countries like India.

While the recurrent anti-outsourcing tone in his campaign speeches were meant to pander to the xenophobic and right-wing elements of his constituency and to catch eye-balls, it caused an atmosphere of uncertainty in India, especially in the outsourcing field.

There have been occasions when he held India in thrall, saying “India is doing great,” but on other occasions, he attacked the country for “taking away American jobs”. He then went on to make flip-flops, changing his stance on immigration visas so many times during his election campaigns that he might not remember what was his last stance.
‘Jobs’ has been Trump’s major trump card as he went on to promise make ‘America great again’. It is quite normal for politicians to make such grandiose promises and high-octane statements during election campaigns. But it is preposterous for Trump to make such claims. For one, he doesn’t need to make America ‘great’. It is already one: no other country in the world can match the US in financial and military might. The thing is Trump’s poll promises and vitriolic anti-outsourcing campaign speeches just don’t gel with the realities on the ground. The world now knows that sky is the limit for a demagogic leader like Trump as he vies for the White House with his political naivety and outlandish proclamations and prejudices. But there is no doubt that once (or if) he becomes the president of the US, his high-pitched demagogy has to be replaced with pragmatism and practical politics. Power, as they say, comes with real responsibility, and, of course practicality. The fact is that there are enough checks and balances in the system which will ensure that no such bizarre stances are taken. So no matter how hard he markets himself as a political leader with extreme and weird views, he will have to change his course as a president.
Now let’s inspect some ground realities. At the end of the day, organizations have to get their cost economics right and look for most talented resources at most economical cost. Outsourcing is not a one-way street. The fact is that the outsourcing process, while generating employment in India, in turn benefits the US economy as it helps their corporations save millions of dollars. So, the US government would not like to undermine these benefits. Moreover,these benefits are also reaped by US technology behemoths most of whom have set up large development centers in India. Invariably, the health of the US economy and the very survival of many corporations rely on India or to the very idea of outsourcing to India, or any other country for that matter. So, any government (led by Trump or whoever) which is hell-bent on destroying the outsourcing business model would be doing it at its own peril.

And it is not just the economies of scale that is an attractive factor for choosing India as a favourite outsourcing hub. India’s unmatched talent counts, too. India remains unmatched when it comes to its vast pool of skilled and talented human resources. And due to reasons like the presence of a large English-speaking population, flexible pricing options, the 12-hour time difference between India and the US, fast turnaround times,availability of infrastructure and technological capabilities, industry-friendly and attractive government policies, India continues to beat its nearest competitors like China, the Philippines, Mexico, etc.
And the new US government just cannot ignore the recent developments on the international geo-political front; enough goodwill has been generated between India and the US since Narendra Modi’s high-profile visit and Trump surely would not like to do anything that would undo this new-found bonhomie, especially in the context of tensions increasing with China on the North China Sea issue.
So the bottom-line is, despite everything, there doesn’t appear to be any real negative impact on the Indian IT services industry if Trump is to become the US president.