IT sector under strain as major markets close for Indian techies

19 Apr 2017


Indian IT professionals are losing markets everywhere - from Australia to United States, the UK and Singapore - with the governments there either imposing outright curbs or hiking visa fees to discourage migration - a move that would strain Indian IT industry badly.

Australia on Monday announced the scrapping of a visa programme used extensively for transfer of skilled foreign workers while US President Donald Trump today signed an executive order to overhaul the H-1B system popular with Indian techies.

Trump signed a 'Buy American, Hire American' order in Wisconsin, with focus on increasing domestic production and manufacturing and making the H-1B visa selective - based on merit - instead of through lottery.

But, Indians living in the US have already started flocking back and the number of Indians in the US searching for jobs in India has gone up over 10-fold between December and March, according to an analysis by consulting firm Deloitte Touche Tohmatsu Pvt Ltd.

There were approximately 600 US-based Indians seeking jobs in India in December 2016. By the end of March 2017, the number had gone up to approximately 7,000, according to a Deloitte analysis.

Returning from an India tour last week, the first thing Australian Prime Minister Malcolm Turnbull did was to do away with the 457 visa, a four-year-old system for entry of highly skilled migrants.

He said Australia will abolish the temporary work visa popular with foreigners and replace it with a new programme requiring better English-language and job skills.

Turnbull also rejected suggestions that the visa policy change was in response to far-right wing political parties, such as One Nation, demanding more nationalistic policies but, in a Facebook announcement, said, ''Our reforms will have a simple focus: Australian jobs and Australian values.''

''We are an immigration nation, but the fact remains - Australian workers must have priority for Australian jobs,'' he said. ''We'll no longer allow 457 visas to be passports to jobs that could and should go to Australians.''

The new visa will be limited to a two-year period and a second four-year visa will require a higher standard of English language.

An estimated 95,000 skilled migrants are in Australia on the temporary 457 visas, a majority of them being Indian techies.

Singapore, another large market for the Indian IT industry in Asia-Pacific, has kept over 200 work permit applications on hold since last year while the UK significantly increased the cost of visas used by Indian techies joining the protectionist wave in nearly all its major markets.

The Indian information technology industry is grappling with popular protectionist sentiment and efforts to curb labour intake in nearly all its major markets.

Besides the curbs on employing foreign techies by IT services providers the move will impact outsourcing of services from low-cost foreign markets.

Companies like Tata Consultancy Services and Infosys have already started hiring locally and this could raise costs for these companies. As costs increase service providers will pass these to clients by negotiating deals as they come up for renewal.

Hiring firms expect a shift in strategy in terms of profiles of Indian IT workers that are likely to be deployed in the US and the UK.

In any case, the new rules will be hard on fresher hiring for overseas deployment and that will have a marginal impact on IT companies in the medium term.

The number of returning engineers whose visas will not be reviewed will create oversupply of talent and a fall in demand for IT skills will in turn affect supply of new talent.

The Indian ''government is examining consequences of the new policy in consultation with all stakeholders''. ''This is also a matter we will be looking at in the context of Comprehensive Economic Cooperation Agreement (CECA) negotiations,'' external affairs ministry spokesperson Gopal Baglay said.

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