Infosys battling Trump administration’s adamancy on H-1B visa issue, has resolved that if Mohammed cannot go to mountain, mountain should go to Mohammed. In other words, if President Trump restricts Indian IT techies from taking onsite jobs in the USA, Infosys would itself set shop in the US, and hire local talent. It is going to open four knowledge centers, euphemism for the rather sullied expression ‘call centers’ with the first being in the state of Indiana. The four centers among them would generate about 10,000 jobs. This should be music to the ears of the cantankerous US President Donald Trump but will it work for Infosys?
There are ominous straws in the wind and precedents. Infosys may have to walk gingerly on eggshells. Think global act local is a sensible mantra and watchword but it is the local element that often spells the difference between failure and success of the foreign foray. Infosys should take a clue from Tata Steel which had to bite the dust after claiming a pyrrhic victory in acquisition of the Anglo-Dutch company Corus Steels. The following are some of the more important factors that could sour Infosys’ dreams:
1. The US labor market unlike India’s is organised and comes under the organised sector. Labor unions are strong despite the US being a capitalist country. Contrast this with India where Bangalore, the IT hub of India, was declared to be out-of-bounds for unions. The point is while IT majors could have lined their pockets by paying abysmally low to the low level employees that constitute the lion’s share of the wage bill of any IT services organisation, the same strategy simply will not work in an enlightened labor market like the US.
2. President Trump wants local talent to be hired all right but would, given his short but obdurate track record, make life difficult for foreign companies setting shop in the US. He has already given dark hints. H-1B visas would be fast tracked for those who are paid US $1, 30,000 or more. He has thus benchmarked the kind of salary he wants techies to be paid. Indian IT majors sooner or later would have to face head winds on this score with politicians playing to the gallery.
3. Though not on a scale of a steel company, IT infrastructure also calls for massive initial investments by way of IT backbone and fast communication facilities. Much of them could go up in smoke should Infosys find headwinds unable to contend with.
4. Japan perfected the art of similar resistance by setting up automobile factories in the US when the latter made life difficult for Japanese auto majors in exporting to the US. While Japan curiously has remained outside the IT rat race, countries like Vietnam and Philippines could throw spanner in the works of Infosys. China too could grid its loins. It is true that the Indian IT talent is far superior to these Johnny-come-latelies but this may not remain so forever.
5. The US itself ironically doesn’t boast much brain power, with bulk of it coming from immigrants. This being so, the local talent Infosys would be hiring would be immigrants who have made US their home. And this could rankle the Republicans especially of the tea party hue.
Infosys would do well to keep all the above factors and more in its mind even as it forges ahead with this arguably a bold plan which takes the fight to the tormentor’s camp. The path would be riddled with many hurdles. But it can take heart from the Japanese auto companies that entrenched themselves in an alien land. It should keep in mind a foreigner or foreign company faces more intense scrutiny vis-à-vis the locals. Call this xenophobia which incidentally is not unique to Indian swadeshis.
Updated Date: May 03, 2017 17:32 PM