IT dynamics revolution (The Hindu)
Mains Paper 2: International Relations
Prelims level : H-1B
Mains level : Indian Diaspora
- The sharp rise in wage costs for Indian IT companies due to an
increase in overseas hiring, augurs well for the sector which has been
trying to find a way around tightening H-1B visa rules.
- Though the rise in staff costs may look to be a cause of concern
in the short term, it could be a blessing in disguise in the long run.
- Staff costs for large Indian IT services companies have gone up by
15-20 per cent in FY 19 as they hired engineers in countries wherever their
clients are located.
- This is being done, especially in the US where tougher immigration
laws and tightening visa rules have become a predictable feature of Donald
- Over the last four years, there have been several tweaking of H-1B
visa rules making it harder for Indian techies to land their dream job.
- This emanates from a belief held by the Trump administration that
companies are bringing in cheap labour to replace American workers through
the H-1B route.
- The US issued 10 per cent fewer H-1B visas between October 2017
and September 2018.
- To fill the gap, IT companies have started hiring locally.
Cost effectiveness in India
- Competition from global IT giants such as Accenture, and a
workforce dominated by legacy engineers trained in old technology platforms
is holding back Indian IT services firms from making big inroads into
winning new-age technology projects.
- In the traditional IT services space, India’s cost
competitiveness, which is approximately 3-4 times cheaper than the US, had
been the mainstay in the global sourcing market.
- For far too long, some IT services companies have relied on
shipping low-cost skilled labour to countries such as the US to drive higher
New visa rule effect
- Tougher visa rules are forcing many large Indian IT services firms
to change their business model and ramp up onshore hiring.
- To cope up with related higher costs, the IT companies are now
beginning to move up the value chain in search of higher margins.
- The earlier business model had led to a situation where Indian IT
firms had become the global experts in executing low-value projects.
- Now they are switching over to new transformational platforms like
robotics, artificial intelligence and automation.
- Indian engineers are also gaining from this shift as companies are
investing in reskilling existing workforce to match the requirements of the
new technology platforms, helping them to find more meaningful projects in
Mumbai instead of implementing an enterprise resource planning software for
a client in Chicago.
- Transformational business is seeing double digit percentage
- This switch is great news for the Indian IT industry.
- Globally, these new technologies are enabling tectonic shifts in
systems and processes that require very different capabilities compared to
implementing an enterprise resource planning software.
- Hiring locally also makes the Indian IT companies more nimble in
responding to these opportunities.
- IT services companies should force a faster transformation in
their delivery models to compensate for the increasing wage costs.
Q.1) With respect to “parole”, consider the following statements:
1. It is a system of releasing a prisoner with suspension of the sentence,
which is usually subject to behaviour, and requires periodic reporting to the
authorities for a set period of time.
2. Prisoners convicted of multiple murders or under the Unlawful Activities
Prevention Act are also eligible for parole.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
Q.1) A tighter H-1B visa regime will help Indian IT move up the value chain.
Critically examine the statement.