Trump’s victory draws mixed reactions from the Indian IT sector

Donald Trump's victory in the US presidential elections has evoked mixed reactions from industry analysts and industry bodies such as NASSCOM.

Sejuti Das Nov 10th 2016

The unpredictable win of Republican Presidential nominee Donald Trump to become the 45th US President has evoked mixed reactions from the Indian IT industry to how his policies might impact the sector.

The Indian IT sector usually makes about 60 percent of its revenues from the US, through projects outsourced by American companies. This sector is already facing multiple challenges, such as shrinking traditional services business, increasing competition, financial and technological shifts, and pricing pressures. In such a situation, if Trump comes out with an H-1B reform plan, Indian IT companies may have to shell out higher wages, which in turn could negatively impact their competitiveness.

ComputerWorld India spoke to the Indian analysts and industry body NASSCOM to know their views on how US presidential election results will impact the Indian IT industry.

Arup Roy, Research Director at Gartner believes that the Indian IT sector must now brace itself for more troubled times ahead.

He said, “The Indian IT sector has already been battling both cyclical challenges as well as technological challenges and now Donald Trump’s selected administration will add to these industry’s woes.”

Trump administration’s protectionist views would have a further dampening impact on growth prospects. “However, what happens during campaigns and what actually transpires in office can vary greatly, and we did get early signs of that in his victory speech. But at the least it adds to the uncertain times,” said Roy.

On a similar note, two Madhya Pradesh-based research firms—Epic Research and CapitalVia Global Research—observed that the IT sector was already struggling with reduced spending, and now the views voiced by Trump regarding bringing back the jobs to the US again will end up creating more trouble for the already nervous sector.

However, on the other hand, several reports have mentioned that India is competent enough in the technology sector, and will continue to play a crucial in fulfilling the IT needs of US enterprises.

According to Ashutosh Sharma, VP and research director at Forrester, Trump’s victory will not have any adverse impact on Indian IT firms’ prospects in the US.

He said, “In the short-term, the IT industry may face some headwinds, just like any other industry. However, in the long-term, we expect that Indian IT firms will reap benefits from expected closer ties between India and the US.”

He further elaborated, “Previous experiences of dealing with anti-outsourcing sentiments by Indian IT firms have equipped them to better deal with such issues, be it in the form of investments, skills or management.”

The existing threat vectors for Indian firms are currently automation and technology shifts, and therefore it is more important for them to focus on helping their clients better serve their end-customers, than dealing with reduced H1 caps, said Sharma.

In a statement, issued post Trump’s victory, industry body NASSCOM said that Trump’s administration will focus on making the strategic relationship with India a high priority, including providing a boost to US-India bilateral trade and investment.

NASSCOM spokesperson said, “Leaders of the Indian IT industry are looking forward to work with him and highlight our sector’s contributions to the U.S. economy. Our sector plays a key role in helping US businesses innovate, grow and make corporate America more competitive.”