The election of Donald Trump to the office of the President of United States of America has brought the possible existential crisis to the Indian IT industry if some media houses are to be believed. His ‘America First’ rhetoric could have possible ramification on the US immigration policy and H1B visa allotment.
But all the brouhaha notwithstanding, this could be a good thing for the Indian IT industry if anything, and here’s why.
Back in 1980’s, the US automobile industry was threatened (ironic how the US gets threatened by globalization and its effects – being one of the chief benefiters) by the cheaper Japanese automobiles capturing their market.
They imposed the Voluntary Export Restraints (VER) of 1.68 million cars to the US annually which continued till 1994, albeit with an increase in quota.
The situation is similar to what the Indian IT industry may be facing. The question is did the VER stop the Japanese car export industry from growing? Ahem, not quite. The Japanese, to make the most from each car exported, started exporting higher end car brands like Lexus, Acura and Infiniti, which were born out of the stable of Toyota, Honda and Nissan respectively.
The VER acted as the catalyst for the development of the Japanese Auto Industry and Indian IT could learn a thing or two from the above example.
Infosys pioneered the ‘Global Delivery Model’ and put India on the world map. It was fuelled by the duality of cost advantage and English-speaking engineering talent. But to borrow from Marshall Goldsmith’s vocabulary – ‘What got you here, won’t get you there.’ The traditional model of revenue, directly proportional to people deployed, is dying a slow death.
The quarterly report of the big IT players bears witness to the change in the game. Technology like Artificial Intelligence, Robotic Automation Process, the Internet of Things and Machine Learning are replacing the bulk of the humans needed for the job. IT is moving from being labor-based, to being an intellectual property-driven offering.
Throwing cheap labor out of the equation, the boutique firms of the West providing digital solutions, are competing with the Indian companies. These boutique shops offering novel solutions for the new age companies are already changing the market with or without Trump’s blow on outsourcing.
If anything, the move made by the new US administration will push India to take bold strides in these new areas of business.
The IT companies have to change themselves internally to make sure they don’t become a brief beneficiary of globalization because they had the resources to deliver, before technology caught up with human labor.