Investors and analysts are closely assessing the potential outcomes of India’s IT industry as the US presidential election in 2024 approaches.
The results of the elections could have a major impact on Indian IT giants such as TCS, Infosys and Wipro.
The stakes are high, as US clients account more than half of the revenue for these companies.
According to the India Brand Equity Foundation the Indian IT and Business Services market is projected by 2025 to reach nearly $20 billion, with American clients playing a major role in this growth.
Trump’s America First’ policy could lead to outsourcing
Experts predict that if former President Donald Trump is re-elected his “America First’ agenda could pose obstacles to Indian IT firms.
Trump’s administration is known for scrutinizing immigration. This includes H-1B visas, which are vital to Indian professionals who work in the US.
Under a Trump Administration, restrictions on H-1B Visas could increase, limiting the number skilled Indian workers who can support US clients.
In 2016, just months after he was elected president, Infosys Cognizant, and Tech Mahindra announced redundancies.
In 2017, Infosys announced plans to layoff about 1,000 senior employees based on performance-based procedures. It also stated that it planned to hire 10, 000 Americans over the next 2 years.
Analysts from BoFA Merrill Lynch and BNP Paribas as well as Nomura had also downgraded the stocks of Cognizant Wipro MindTree etc.
PhillipCapital stated in a recent report that the short-term impact of a Trump win would be felt by the Indian IT industry due to his strict immigration stance.
Indian companies are preparing to meet these challenges.
The report states that “Indian IT companies have adjusted their strategies to decrease dependency on H-1B Visas.” This includes increasing local hiring, using subcontractors who already have work visas and expanding nearshore centers in Canada or Mexico.
These measures are a buffer to Indian firms. However, a restrictive visa policy may still limit the opportunities and profitability of high-skilled Indian professionals.
The Harris victory could ease immigration policy and boost IT
If Kamala Harris is elected, India’s IT industry could have a more positive outlook.
Previous elections have shown that Indian IT tends to perform best under Democratic administrations.
Indian IT giants such as TCS, Infosys and Wipro have seen stock gains of between 17% and 29 % in the past three months following the Democratic victory in 2020. This shows the sector’s positive reaction to Democrat-led policy.
Harris, who is known for his progressive stance on immigration issues, will likely promote policies that open up pathways for high-skilled migrants, benefiting Indian professionals and tech talent.
The lifting of restrictions on H-1B Visas, which are a valuable resource for India’s IT workers, would allow Indian companies to deploy more talent in order to meet US demand. This is a vital factor in an age of digital transformation and increasing tech needs.
According to Saurabh Pawa, Head Research at Quest Investment Advisors: “US elections don’t generally impact IT spending patterns for US corporations. So the election cycle might not significantly change the sector’s trajectory.”
He also points out that certain policy changes, particularly on immigration, could improve operational flexibility for Indian companies under a Harris Administration.
This post on how the US election in 2024 could affect India’s IT industry may be updated as new developments unfold.
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