One remark from Kerry that could be a reason for cheer for the Indian IT industry was his acknowledgment of the need for changing some of the discriminatory provisions of the US Immigration Bill and ensuring more people are able to travel and support commerce, education, etc. Kerry also stated that while the Bill is very important to the US, it is highly unlikely that it will move in the next few months. This is the first time there is acknowledgment from a high-ranking US official on the need for changing the Bill and addressing the concerns that the Indian IT industry has been expressing.
Investing well over $5 billion in the US in the recent years, India-based IT companies have been a key element in supporting the USs leadership in business and industry. Indo-US business
matured over the decades. According to the US Deputy
Secretary of State, William J Burns, bilateral trade is likely to have exceeded $100 billion in 2013.
In spite of the raging rhetoric on outsourcing, US policy had followed a carefully calibrated approach to address the shortage of skilled IT workers in the country by balancing immigration with various measures to encourage citizens to take up science, technology, engineering and mathematics (STEM) education and training. In part, this has given US businesses access to workers on temporary visas to provide highly skilled support for projects, for whatever length of time, as per requirements. This balanced approach has been crucial to the growing American economy, while also benefiting the Indian IT and economy.
Certain provisions in the Senate Immigration Bill 744, as passed in June 2013, could upset this balance, to the detriment of US companies, employment and economy as also Indian IT. Access to the best technological solutions, with on-site support in the US, would be restricted or will become more costly. Many American companies would be forced to move more IT operations overseas, thereby eroding jobs in the domestic market and tax revenue. Other businesses will have no choice but to cancel programmes, pass up market opportunities and reduce plans for growth because skilled IT support would no longer be available as per their needs.
Inevitably, the punitive fees and other costs, as outlined in the Immigration Bill, would mean higher costs for US-based businesses and other institutions using IT services. This, in turn, will impact their balance sheets and competitiveness.
In fact, US customers of Indian IT that risk being affected by the Bill range from Fortune 500 companies to small enterprises and start-up firms. These companies rely on state-of-the-art solutions for delivering efficiently and competitively.
Thus, measures that ostensibly protect American workers would lead to wholly unintended consequences and a diametrically opposite impact for the US.
Filling the gaps with American employees is not an option for many companies because the shortage of skilled IT workers in the country is already exacerbated. Less than 2.4% of US college students graduate with a degree in computer scienceand that is fewer than the figure from 10 years ago. The vacancy rate for STEM jobs in the country is 3-4 times the rate for other sectors. Data indicates that, by 2020, there will be 1 million more computer science-related jobs in the US than there would be students graduating with a relevant degree.
It is also important to recognise that Indian IT service providers have invested billions of dollars in the US and have been increasing these investments rapidly. They support employment of over 200,000 US citizens and have been increasing this employmentmore so than their American competitors, according to a recent JP Morgan report. These global service providers also pay hundreds of millions of dollars in social security and taxes through their corporations and their employees. They also contribute significantly to academic institutions and their communities.
The notion that skilled workers on visas have undercut the salaries of others is also a myth: According to the Brookings Institution, only H-1B visa holders are paid more than American workers with a bachelors degree, that too just narrowly$76,000 versus $67,301 (2010 figures).
In the emerging digital economy, the movement of skilled professionals across the borders for specific tasks will become increasingly important. Legislators must recognise the difference between skilled labour mobility for projects versus immigration and address the two differently.
It is encouraging to see the steps being taken by the US administration to foster partnership with India. The 100-day US-India Plan put forward by US Senator Mark Warner recognises the two nations unique bilateral relationship and the need to work cooperatively to make progress that will benefit both nations. His proposal, among other things, says a review of policies for high-skill employees would help ensure companies in both countries have access to talent to help US companies and the American economy grow and innovate
Modis meeting with President Obama in Washington this September would provide an excellent opportunity to address US-India trade issues, including the free movement of business professionals between the countries given how Kerrys visit has already set a positive tone.
The author is former president and chairman, Nasscom