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Trump unlikely to reduce IT from India

The fact that Donald Trump's labour secretary has previously offshored IT work to the Philippines could ease IT services fears, particularly in India

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The election of Donald Trump as US president on the promise to bring offshored jobs back to the US has the offshore IT services industry, particularly in India, playing a waiting game.

While Indian IT service providers, which run the IT for many of the US’s largest businesses, have been preparing for the worst, the appointment of a labour secretary who outsourced the IT at his company is seen as a contradiction that could ease their fears.

Meanwhile, according to one expert, reducing manufacturing imports from China is an easier target for Trump to use to make his America First mark.

According to the Columbia Daily Tribune, Trump’s labour secretary, Andrew Puzder, has outsourced the IT at a fast food company he owns to the Philippines since 2010. It reported that a spokesman of the company, CKR, confirmed it still has its IT operations there.  

This might hold some hope for offshore suppliers. In November last year, Gartner analyst Arup Roy said the global IT services sector would be hit by the protectionist policies of Donald Trump, with India-based suppliers expected to be hit the hardest.

He warned them to “brace for further troubled times ahead” and forget about double-digit sales revenue growth in 2017. “Trump’s protectionist views would have a further dampening effect on growth prospects if the views were to crystallise into serious policy implementations,” said Roy.

Speaking to Computer Weekly in November 2016, Ashish Gupta, European head at HCL, said there are short-term challenges facing Indian suppliers following Trump’s election and the UK’s decision to leave the European Union.

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He said it would have hit Indian firms hard if this had happened 10 years ago, but today these companies are deeply entrenched in western enterprises and have invested heavily in the countries where their customers are. For example, 65% of HCL staff in the US are US citizens.

Peter Schumacher, CEO at management consultancy The Value Leadership Group, said for Trump, pressuring Indian and US firms to shift software development work to the US may not be worth the effort.

“The US-Indian trade deficit as a whole was just 7% of the size of the Chinese trade deficit for the first nine months of this year – $23.3bn compared to $289bn,” he said. “Looking at trade negotiations as a businessman, Trump will see confronting China as a much more attractive opportunity.”

Schumacher said that focusing on China would make more sense to Trump politically too. “The trade deficit with China is predominately for manufactured goods. Bringing some of those jobs back to the old manufacturing centres in the Rust Belt states that voted for him will yield a greater political dividend than repatriating software to the deeply anti-Trump east and west coast tech hubs.”

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