World Economy

US Curbs on Outsourcing Will Hit Own Economy

US Curbs on Outsourcing Will Hit Own EconomyUS Curbs on Outsourcing Will Hit Own Economy

India’s IT industry has warned about the adverse impact that curbs on outsourcing will have on the US economy, which lacks high-skilled workers.

The country’s premier trade body, National Association of Software and Service Companies, will be taking a delegation to the US in February in an attempt to reach out to the new administration. US President Donald Trump had promised to follow a ‘Buy American, Hire American’ policy in his inaugural speech on January 21 in Washington, PTI reported.

 “The critical thing for this industry is high-skilled workers and the fact of the matter is that those high-skilled workers are not available in the US… If the agenda of creation of jobs needs to be pursued, we feel that current windows will need to be kept open to get the requisite skilled workers,” R. Chandrasekhar, president of Nasscom said.

Chandrasekhar said that the Indian IT industry provided services to American companies, which helped them to be competitive in the global market.

“In the US, the job creation engine is only corporate America. There is no other way that US economy can generate jobs. And therefore, to keep corporate America fighting fit, ensure that it remains globally competitive, ensure continuous increase in productivity, these services are needed. If you need these services, you need skilled people.”

More than 60% of the Indian IT industry’s $108-billion export revenue comes from the US. And in the four-year period, between 2011-15, Indian IT industry paid $20 billion in taxes to the US.

 Short-Term Impact

There is huge inter-dependency between the US and the Indian economy. Citing an example, Chandrashekhar said that an Indian IT company which tried to hire people in the US, had interviewed more than 4,000 people but could hire only about 20. “These facts have been shared with the authorities. It’s not that they were not qualified, but are not qualified with the skills that are needed,” he said.

According to December 2015 projections by the US Labor Department, employment of computer and information technology occupations will grow 12% from 2014 to 2024 (faster than the average for all other occupations).

However, due to shortfalls in college graduates in science, technology, engineering and mathematics, entering the STEM workforce, there could be 2.4 million unfilled STEM jobs in the US by 2018—with more than half of these vacancies in computer and IT-related skills.

 Foreign Students

The Nasscom president said even in colleges and universities in the US, more than 50% of the students are foreigners in STEM courses. “So, even if you want to hire people from American universities, you can only hire them on visa because they are foreigners as well.”

On creation of jobs in America, he noted that the Indian industry hires a lot of people, including Americans.

According to a 2015 report, the industry had created more than 400,000 jobs in the US, including 150,000 direct employment positions.

Chandrasekhar highlighted that the problem is “discriminatory”, referring to provisions implemented by the US to curb immigration of high skilled workers.

“The restrictions which were imposed in terms of higher cost of visa is applicable only to so-called 50-50 companies, which is actually only the Indian companies. 

So, the definition has been crafted in a way that only Indian companies get affected and even some of the other bills which have been introduced are only targeting so called 50-50 companies.

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