Trump­ing Against the Odds

There’s enough op­por­tu­nity for In­dia once it looks be­yond H-1B visa lim­its

The Economic Times - - The Edit Page - Pranab Dhal Sa­manta

Is US Pres­i­dent Don­ald Trump’s eco­nomic plan dis­as­trous for In­dia? The in­stant an­swer, more of­ten than not, is a yes. It fol­lows a pre­dictable nar­ra­tive. Trump and his peo­ple want to stamp out the H-1B visa pro­gramme, push In­di­ans away, keep jobs for Amer­i­cans. There­fore, brace for bad tid­ings.

Ob­vi­ous as this may ap­pear, the as­sump­tion still needs to be taken be­yond face value. To be­gin with, it’s not pru­dent to judge a new US pres­i­dent from a nar­row IT per­spec­tive. And then, In­dian IT prow­ess in the US doesn’t stand on such fee­ble legs that it can’t make a state­ment by it­self.

Pure Pay Play

Data bears that out. In­dian IT bod­ies have been high­light­ing that the top seven In­dian com­pa­nies ac­count for only 13% of the to­tal new H-1B visas is­sued. This is a frac­tion of what big US­com­pa­nies­likeGoogle,Ama­zonor Mi­crosoft cor­ner. Which brings one to the is­sue of cost of labour.

Out­sourc­ing isn’t about just cheap labour be­cause an H-1B worker gets paid more than a ‘na­tive’ US em­ployee. A Brook­ings study in 2013 showed that an H-1B worker got paid $76,356 a yearcom­paredto$67,301ayear­byaUS na­tional with a bach­e­lor’s de­gree of equiv­a­lence. Sub­se­quent stud­ies have shown that the en­try of H-1B pro­fes­sion­als has no ad­verse im­pact on un­em­ploy­ment rates in the US.

So, the is­sue is about a cer­tain qual­ity of skilled labour that’s not eas­ily avail­able in the US. Which is why there’s a cap­ping on num­bers and wages for H-1B visa-hold­ers.

The In­dian sys­tem is well armed with th­ese facts. After all, this isn’t the first time that the H-1B case is to be laid out and dif­fer­en­ti­ated from the job-loss cam­paign. For­eign sec­re­tary S Jais­hankar, in his re­cent ad­dress at the Gate­way of In­dia di­a­logue, also put out the of­fi­cial line when he drew adis­tinc­tion be­tween ‘off­shoring’ and ‘out­sourc­ing’ of US jobs.

But what’s more im­por­tant to un­der­stand here is where Trump is com­ing from and what he’s get­ting at. His pol­i­tics, his per­sua­sion and whether the ‘job-tak­ers’ la­bel on In­di­ans can be duly chal­lenged within his po­lit­i­cal logic. Es­sen­tially, why In­dia would make more sense to Trump than, say, China or even Mex­ico?

Let’s go back to out­sourc­ing again. Most US com­pa­nies that hire In­dian work­er­shavenowor­gan­i­cal­lye­volved to tar­get the In­dian mar­ket. And, the steady pres­ence of In­di­ans in th­ese Sil­i­con Val­ley com­pa­nies has made that pos­si­ble. Now we hear the com­pa­nies out­line de­tailed busi­ness plans for In­dia and its catch­ment re­gion.

So, out­sourc­ing as a busi­ness model is now go­ing be­yond just at­tract­ing skilled tal­ent. It’s now very much the en­gine for ex­pand­ing into new mar­kets, thereby cre­at­ing more jobs both in the US and out­side. In many ways, out­sourc­ing has sparked off a well­net­worked ecosys­tem that’s bring­ing mor­ein­vest­men­top­por­tu­ni­ties­forUS com­pa­nies to grow.

Why is this any dif­fer­ent from Trump’s larger charge against Amer­i­can com­pa­nies tak­ing away jobs from the US across sec­tors? Most man­u­fac­tur­ing com­pa­nies shut shop in the US and went to China or Mex­ico be­cause it was sim­ply cheaper to man­u­fac­ture there. The tax breaks and other in­cen­tives far out­weighed the cost of sac­ri­fic­ing skilled work­ers in the US and reskilling lo­cal work­ers there.

Th­ese com­pa­nies did not go over­seas in search of skilled work­ers and nei­ther did they pay them more than US‘na­tive’work­ers.Whichisquitethe op­po­site of the out­sourc­ing model.

Logic Alone Trumps

Now, that’s only still the eco­nomic dif­fer­en­tia­tor. The prin­ci­pal po­lit­i­cal point that in­forms the Trump plan is that while th­ese com­pa­nies man­u­fac­tured goods out­side, the US al­ways re­mained the main mar­ket to sell their goods. Wash­ing­ton’s var­i­ous free trade agree­ments, Trump has ar­gued, sup­ported this process that even­tu­ally saw work­ing-class Amer­ica lose jobs while rich Amer­i­cans pros­pered and got by with Chi­nese-made goods.

In­dia, how­ever, is dif­fer­ent. The In­dian case for in­vest­ment rests on its own mar­ket po­ten­tial.

Just like in the IT sec­tor, for­eign com­pa­nies have sought to in­vest here to tar­get the huge In­dian mar­ket. Un­like China or many other coun­tries, In­dia has never been an at­trac­tive man­u­fac­tur­ing des­ti­na­tion to prin­ci­pally ser­vice the US mar­ket.

How­ever, tak­ing a leaf from the IT sec­tor, In­dia can project it­self as an in­vest­ment des­ti­na­tion for US com­pa­nies try­ing to tar­get In­dia and its catch­ment mar­ket. So, if Lock­heed or Boe­ing were to make fighter air­craft here, they would be ex­pand­ing their op­por­tu­ni­ties in this re­gion, not shut­ting shop in the US. Which is why the pol­i­tics around dif­fer­en­ti­ated labour costs must be ad­dressed in an eq­ui­table man­ner and In­dia has noth­ing lose in that con­ver­sa­tion.

In­sum,Trump’sman­datepiv­ot­son a com­pelling po­lit­i­cal logic with huge do­mes­tic trac­tion, which isn’t de­signed to hurt In­dia. So, there’s enough scope for con­ver­sa­tion and op­por­tu­nity if only we look at out­sourc­ing be­yond just H-1B visa lim­its and US in­vest­ment into In­dia be­yond just be­ing a bet­ter al­ter­na­tive to China.

In other words, rather than com­ing across as in­cre­men­tal, in­no­va­tive visa-keep­ers and seek­ers, a bolder re­brand­ing of In­dia may be a bet­ter and ef­fec­tive way to shake off old bag­gage to deal with new Amer­ica.

You re­ally have no rea­son to worry

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