By Jayshree Sengupta*
In every way, the self-made flamboyant billionaire Donald Trump is an enigmatic and puzzling personality. His rise to becoming the presumptive Republic Presidential nominee makes him all the more watchable and interesting. Does he really mean what he is saying or is he going to change his stance once he enters the Oval office? On some occasions he has been positive about India, saying “India is doing great” and on others, he has slammed India as taking away American jobs. He even mimicked the Indian accent of a credit card data processor from India, with whom he talked regarding his credit card account, to drive home the fact that a huge amount of outsourcing to India is taking place. Basically, he is targeting all the countries that he thinks are taking away jobs from America. ‘Jobs’ is the main election issue for Trump and ‘making America great again’ is Trump’s own slogan to increase his mass appeal. The job growth has indeed been disappointing in April 2016 at 160,000 and much less than predicted by the Wall Street. In May, only 38,000 jobs were created when the expectation was 162,000 jobs.
Every leader aspires to make his country great, especially at the time of elections! America doesn’t have to aspire to be great because it is already the most powerful country in the world in terms of financial and military might. At least that is what Americans think of their country themselves. In a recent survey by Washington based Pew Research institute, 72 percent of Americans say that US is the leading military power and 54 percent believe that US is the world’s leading power. Only 34 percent think China is important. So, instead of harping on the existing reality regarding what Americans think of the USA’s position in the world, he is fanning up people’s fears of job losses to Indians and Chinese and America becoming poor as a result.
Nevertheless, Trump’s fears about China and the retaliatory measure that he will take if and when he comes to power against the flood of imports from China are appealing to many Americans. But, the truth is that the average American has greatly benefited from trade with China and outsourcing services from India. Trade in goods and services between US and developing countries is saving Americans millions of dollars. Americans would have to pay much more for services currently outsourced to India compared to what they would pay if they were to be rendered at home by Americans simply because wages are much lower in India. Similarly, China’s supply of cheap goods to US has kept its economy afloat and Americans have been able to enjoy a high standard of living and low inflation.
Indians who go to the US on H1B visas are also serving the US very well because they are hardworking and diligent as well as much cheaper than local American technical and other personnel. Apart from many other jobs that H1B workers perform, a small number of employees of India based IT companies also go to US to work on American companies’ sites to help them roll out the software and systems they have built. It is true that Indians are clamoring to go to the US on H1B visas and the numbers applying far outnumber those who got them. In April 2016, a cap of 85,000 H1B visas was quickly filled.
Most Indians want to improve their incomes by migrating to the US even on a temporary visa which can be up to six years because with their frugal ways, they are able to save a big proportion of their incomes and send money back home to their families. Most Indians who have gone to the US also try to settle there. This has been the pattern for all who migrated to US in the past from all over the world — it is a country of immigrants.
Migration to the US of Indian doctors and engineers reached its peak in the 1980s and there was much talk about brain drain. In China too, the same pattern could be observed. But in recent years, there has been a reverse brain drain from the US to China as professional Chinese have shown a preference to return home.
The Indian diaspora in US is politically visible and financially strong because most are professionals with high educational backgrounds. Their contribution to the US economy has been recognised by various US presidents in the past. Even though Trump is targeting Indians, he is still being supported by many Indians — perhaps because of his views on Muslims and Pakistan. Bobby Jindal has claimed to be a supporter of Trump.
But, the reports about growing resentment towards Indian techies and others employed in big companies is bad news. Apparently in many big companies, the Americans staffers themselves have to train their H1B replacements and they resent it greatly. Trump is fanning up such resentment. Trump in the White House may bring about reforms aimed at increasing H1B prevailing wage so that the Indian workers cannot be used as cheap labour. Also, he can make it mandatory for employers to recruit American workers first and only when they fail to do so, they may opt for hiring H1B workers. If there are stricter laws for hiring and higher visa costs, it will impact on the profitability of Indian IT companies and their businesses in the US because it accounts for 60 percent of software exports from India.
If Trump wins, he could even initiate a strategy of greater automation in American IT industry which will lower the demand for outsourcing from Indian companies. Thus to be on the safe side, the Indian outsourcing industry should reboot itself and focus on developing higher value added services for export and for domestic market.
*Jayshree Sengupta is a Senior Fellow working with ORF’s Economy and Development Programme. Her work focuses on the Indian economy and development, regional cooperation related to the SAARC, BRICS, ASEAN and EU groupings, social sectors like health, education and unemployment, and women and development.