Trump’s a blessing in disguise, says Ambani, asks IT companies to serve India
Mukesh Ambani says the Indian IT industry should not get bogged down by protectionism, and should focus on solving problems in India, which is a huge market.Updated: Feb 16, 2017 13:51 IST
The US President Donald Trump wants to “Make America great again” and this is widely believed to impact the “offshore” business model of Indian IT companies.
But, Mukesh Ambani, chairman of Reliance Industries is not worried. “The world might want to build walls around. It is important for us not to be influenced by those developments…” he said, on Wednesday, at the Nasscom’s leadership summit.
The Indian IT industry is reeling under pressure of the US government clamping down of H1-B visas, reduce influx of Indian software engineers going to America, and work for much lower salary compared to what a local would get.
Ambani said that Trump’s stand can be a “blessing in disguise”. Meanwhile, the domestic IT industry, made of companies such as Infosys, Tata Consultancy Services and Wipro, can “focus on solving problems right here, which is a huge market.”
That might not be all that easy. To put things in context, the US makes for 65% of $155 million IT revenue. The domestic market is a third of that. According to Nasscom’s older estimates, the exports business was growing at 10.3%, while the domestic business was growing at 3.2%.
Meanwhile, the industry lobby has said that in 2016-17 the growth in IT revenue will be 8.6%, which is in the lower band of its guidance of 8% to 10%. However, the industry failed to forecast growth of 2017-18.
According to CP Gurnani, chairman of Nasscom and CEO of Tech Mahindra, the range of growth can vary between 6% and 10%, due to political uncertainties.
According a London-headquarters publishing house, between 2012 and 2015, TCS, Infosys and Wipro and Infosys submitted over 150,000 visa applications. The median salary for the applicants was $69,500. That would be 30% to 40% lower than what companies would pay the locals.
Trump plans to double the minimum wage for H1-B visa holders, in an attempt to bring back lost American jobs.
India’s IT revenue has grown on the back of global outsourcing. R Chandrashekhar, president of Nasscom added that uncertainties also come currency fluctuations, political volatility, stagnant discretionary spending by banking, financial and insurance services clients.
Ambani believes that the India is at the cusp of a technology revolution. He has pumped in close to Rs 2,00,000 crore into his telecom venture, Reliance Jio, as he expects data to become the next big frontier for Reliance Industries, which has a market capitalisation of Rs 3.45 trillion.
Ambani said that while some of the developed countries are focusing on protectionism, the Indian IT industry should strengthen its domestic capabilities. “We have a very big advantage in this new world of digitization… we should continue to be open and never think whatever the world changes,” he said.