Is the Party Over for Indian IT Companies?
Indian IT revolution has been the driving force for the Indian economy for last 25 years. Companies like Infosys, TCS, WIPRO, HCL etc have become really large given the outsourcing of skills and work to India and Indians.
In all this H1B visas were the driving force. All these companies and the “bodyshoppers” or as they are known respectably as “Staff Augmentation” companies have used H1B visa IT employees to make money and lease off people to large US companies. They pay very little and spend minimal money for the benefit of the employees when in the US but make millions to boost their bottomlines.
Over the years, the Indian IT companies have gone on a downward rate spiral which was essentially suicidal in the long term. And instead of focusing on Value, these companies focused on Cost. So, the way for their sales team to sell projects has been to pitch lower cost and not how much value they will create for the client. I have personally seen rates of Indian developers charged to the clients drop from $45/hr to $15 within a matter of 3 years! Just to win business!!
So when this year ‘H-1B and L-1 Visa Reform Act of 2016’ was introduced to increase the fees to help pay for STEM skills at schools (or those in the areas of Science, Technology, Engineering and Math), it meant bad tidings for the Indian IT team. The cost increased by $4000! Out of the 65,000 H1s every year, Indian firms get 25-35,000 H1s. Taking an average of 30,000 visas garnered by Indian IT firms – we are looking at at an additional expense of $120 million each year! This is the extra money they will now pay for the SAME number of employees in the US. It is a direct impact on their bottomline for no change in their revenue or capacity.
What one finds really strange is how the entire leadership of Indian IT firms have allowed their corporate core competency to be held hostage to the Internal Homeland policy of another country! If that is not rank imbecility, I don’t know what is?
Artificial Intelligence replacing analytics jobs
Now enters the push for Artificial Intelligence and a lot of jobs that we all thought were safe in India, are on the line!
The decision by consulting major Capgemini to replace nearly 40% of its work done by its resource management group with IBM’s cognitive computing system, Watson, is a clear indication that it is not just repetitive or mechanical jobs that are at risk. Artificial intelligence (AI) is capable of taking on those tasks that require analytical skills. The tasks from education and skill development just got tougher.
The Indian IT and science companies which should have been at the forefront of cutting edge of technology have been doing nothing to either take a lead in the cutting edge technology or mitigate the issues stemming from it all.
Per experts and the trends happening thanks for AI, Indian companies will see a big downturn in their demand and sales very soon! So what is the way to mitigate the impact of not just the H1B issues – specially if Trump wins – but also the AI technology. Even if Trump doesn’t win, the information that he has set forth in front of the US public will impact the policies of US going forward. The impact of AI on the other hand will be a bigger blow than anything we have seen until now. And, for that Indian IT talent needs to upgrade to do research at cutting edge. We need to do what is being done at places like MIT, Caltech, Stanford and sync it up with the industry in a matter of 3-5 years at most! A timeline I doubt that these companies even have with them!
Featured Image Source: DeviantArt/ICT Overdose