In a recent article, a professor in one of the IIMs applied game theory to the ongoing H1-B visa imbroglio. He argued that the choices among the stakeholders, policy-makers, nations, employers and employees were based on choices and actions of the others. It was more like a prisoner’s dilemma, where there are more than two players who needed to make strategic decisions. In a nutshell, he summarised that while the US will get best skilled techies due to the $1,00,000 one-time fee and wage-based selection, the mid-skilled ones will venture to other nations, and the bottom rung will either remain in India, and head back home (B2B: Back to Bengaluru).
But we feel the H-1B visa changes are more akin to marketing choices. There are 4Ps involved: Policy, power, profit, and professionalism. America is trying to tweak policies to ensure that the best people arrive on their shores. Only the high-salaried ones will get the visas, and those lower on the remuneration ladder will lose out. This will protect lower- and mid-level American jobs, and cut out the labour arbitrage. The flip side: As senior Indian techies arrive, they will become project managers and team leaders, and the Americans will work under them. As human biases go, the former will favour Indians, rather than the Americans to move upwards.
The new regime will lead to societal power shifts within the US. For almost three decades, and even before the 1990s, Indian-Americans have exhibited the growing soft power of India. Their wealth has grown, they have occupied powerful positions, not just in the tech world of California, but in politics and other areas. As the past few presidential elections prove, in certain states, they form huge vote banks, and swing elections. The US president Donald Trump won his first term due to a massive support from the Indian-Americans. The tables will turn a bit. New Delhi’s clout in Washington will diminish due to the fluctuating fortunes of the Indian lobbies. Maybe the courts will redirect the destinies through anti-Trump orders.
Companies, both Indian and American, will rejig their strategies. As it becomes near-impossible to send lower-level techies to the US, people who are cheaper, work harder, and fall in line, their costs will go up if they wish to maintain their stranglehold over H-1B visas. Either they will slow down, and cut down on the visas, or they will nudge the American clients to pay more. The second choice is difficult given the state of Indian and global IT due to tech disruptions. The flip side: A horde of firms will crop up, like the ones in the 1990s, which will excel in labour arbitrage with a difference. They will offer lucrative jobs to prospective employees, either deliver or cheat, and charge the $1,00,000 one-time visa fees from the job-seekers.
Professionals will be at loose ends, at least in the immediate future. Youngsters will postpone their American dreams for a few years, or seek employment in Europe and Asia. Many of them, who are studying in the US, or have finished the courses, will head back, and try again later. Within India, the attraction to join IT firms will abate, as visas become expensive. There will be a churn in the professional choices made by those graduating out of elite colleges and institutes. “IT and software will no longer be on the top of the students’ agenda during campus interviews. They may veer towards financial services, or other sectors,” says a prominent recruiter. Re-skilling will become a challenge for the IT firms.
For the Indian policy-makers, push factors will force them to improve the tech and start-up ecosystem within the country. Only this will enthuse the bright ones to stay in the tech sector. Until now, IT grew despite the government, although tax breaks and Digital India did provide financial and infrastructure incentives to the industry. This will not be possible in the new environment. Even if only a few thousand techies crossed the seven seas to reach the US via H1-Bs, the remaining professionals knew that they had the chances to do so. With these dimming down, they will need to be wooed and wowed by both the companies and Governments. States will need to be proactive, especially Andhra Pradesh, Karnataka and Tamil Nadu.
Other nations will find ways and means to attract Indian techies. This began a couple of decades ago, but will accelerate. Europe will feel that if it plays the cards well, it can either compete with the US in new technology, especially Artificial Intelligence (AI), or race ahead. Although it is difficult to imagine. China may partner with Indians to win the ongoing AI and chip wars. Chinese investments in the Indian tech sector may revolutionise the latter. But then India will need to balance this with security concerns. In the past, both New Delhi and Washington were cagey about Chinese tech. Japan is a viable alternative in the present circumstances.
Profit will subsume the tech firms, both in India and America. The clients in the latter will be apprehensive about any increase in tech costs. If they do not offer higher prices to the Indian vendors, they will need to contend with the higher costs of American employees, and the increased expenses that Indians will pay as visa fees. Indian IT will search for a new business model. Over three decades, it graduated from full-fledged onshoring (working on clients’ sites), an onshore-offshore hybrid (some work abroad, and some in Indian campuses), and outsourcing (most work in India). With H-1Bs becoming less attractive, the next model may be on-sourcing, where Americans come to India to be skilled and trained. Indians can go to America to impart skills to the locals. The US President Donald Trump has floated the idea of how foreign techies can come to the US to impart knowledge and skills to Americans.
This leaves us with the professionals again. Once they pinpoint other attractive sectors, rather than IT, they may be able to negotiate harder terms with employers. As supply of IT workers dries up, tech firms will need to increase salaries, bonuses or productivity-linked payments. Maybe the firms will decide that it is more profitable to hire non-techies at cheap rates, and train them inhouse. A new model may emerge of campuses within campuses. The first will represent educational campuses to re-skill the employees, and the second the IT campuses where the trained workers will be employed. The firms can charge for the first, and pay lower salaries too.