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How TCS, Infosys and Wipro kept Donald Trump happy in election year

Analysts say Indian IT services industry in good space in both short and medium term.

, ET Bureau|
Last Updated: Feb 24, 2020, 08.35 AM IST
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As per media reports, Indian IT services companies have been paying higher wages than US-based companies to their US employees
MUMBAI: In a year when the US is going to the polls, India’s IT services industry will see business grow as it has hired local engineers in small towns to meet requirements of clients whose businesses are getting disrupted by technology, analysts have said. US President Donald Trump, who is on a two-day trip to India starting Monday, is hoping to get re-elected in the November 3 elections, having emerged as a frontrunner. Trump came to the Oval Office on an anti-immigration plank. The US economy is growing and unemployment has fallen from when he took over the top job in 2017.

“The short- to medium-term future is bright for the leading Indian IT services majors,” said Phil Fersht, CEO of US-based IT research and advisory HfS Research.

“Trump has long diverted attention away from Indian-heritage firms like TCS taking on deals with US firms, especially as firms like Infosys, Cognizant, Wipro and HCL have increased their investments in US delivery centres in recent years,” he added.

Investors have been concerned about risks to Indian IT firms’ business outlook in case Trump gets re-elected and ramps up action to insource IT capability back to the US, with the intent of bringing more jobs into the country.

Analysts, however, suggested that companies have done enough to allay his concerns.

Indian IT firms have set up local delivery centres staffed with engineers in the US, and this strategy is in their favour, they pointed out.

HCL Technologies said last week that it would open a centre in Hartford, Connecticut.

“We seem to have hit a stable situation with visas with the Indian firms having already adopted coping mechanisms,” said Peter Bendor-Samuel, CEO of research and consulting firm Everest Group.

Since Trump took over, US technology companies have been favoured over Indian firms for the coveted H-1B visas, or work permits for technology workers. Indian nationals continue to garner a big chunk of these work permits.

“It appears that the administration’s attention is now on low-cost wage immigration with no further action indicated with (regard to) high-end wage immigration that the Indian firms rely on. It does not appear that there are other measures being contemplated beyond the restrictions on H-1B which have already gone into effect,” he added.
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According to recent media reports, Indian IT services companies have been paying higher wages than US-based companies to their US employees. This comes amid concerns over the US’ ability to supplement its economy with enough STEM (Science, Technology, Engineering and Math) talent required in technology services.

Indian IT services firms pay staff in the United States average wages that are higher than local companies, ET reported in September citing a study by IHS Markit.

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