BRAIN DRAIN TO BRAIN GAIN

K.P. Radhika

Assistant Professor – SIMS

The recent buzz and alarm on the global arena was about the Protectionist policy decisions by President Trump, specifically on the employment grounds. The new bills and policies on visas have turned the policy makers’ attention of all nations to restore balance both on the employment and bilateral relationship with US. India is one among the top trade and employment partners of US, strongly hit by the recent government’s policy decisions on the H-1B visa. The understanding of the issue is enhanced in this blog with the current scenario and the challenges posed.

The Scenario

The Indian bilateral trade and employment relation with the United States of America in the past three decades was strengthened with the Business Outsourcing Industry that has matured to reach heights of almost $150 billion. This industry has attracted the highest Indians due to its great potential on the employment front. Of the total Indians currently working in the US, majority are associated with the IT and ITES industry followed by health care professionals and few related to the pharma and other industries.

The Indian population working in the US predominantly holds the H-1B visa (H-1B is a non-immigrant visa that allows American companies to temporarily employ foreign workers in specialty occupations). Statistical reports reveals that of the 4.5 million Indians in the US, 65 percent holds the H1B Visa, 10 percent have become citizens and the balance are Green Card holders and other visa holders.

The protectionist policy and the challenges

Sarabjit K Nangra, vice-president, research, IT, Angel Broking, says, “If protectionist policies continue beyond rhetoric and specific curbs are erected, there could be a 30-40% hit on net profit.” For example, a hike in the H-1B minimum wage to $130,000 could add $3.5-4 billion to the tech industry’s wage bill (that’s additional costs calculated for 55,900 H-1B applicants sponsored last year), shaving off a significant part of its annual operating profit.

• The recent bills introduced by President Trump in the US Congress seek to make the outsourcing industry tougher and expensive for both India and the US. The earlier pay associated with H-1B visa per employee was $ 60000 per annum since 1989, which has been hiked to 137000 $ to be paid annually to get H1B visa. This makes it unviable for the Indian IT companies to send employees in the future.
• The US based companies will also face increase in cost of hiring employees and therefore will be forced to start sourcing local people that poses threat to the end user for want of experienced and quality service.
• With regard to the Indian IT companies, majority of the projects have their clients sourced from the United States. The series of curbs posed by the bills of President Trump will make the projects of Indian IT giants like TCS and Infosys unviable, due to the increasing cost and will in the future pose threat to the survival of these Indian IT companies.
• “For tier II companies, the short-term blow could be harder as they don’t have much onsite resources and bank on labour arbitrage to sell services. There could be a backlash in the next 18-24 months as companies will have to tap into globally available skills.” Industry body NASSCOM reckons a demand-supply gap of as high as 80 million over the next decade for digital skills, with the new policy.

With the above challenges the probability of return of employees to India has been forecasted to be on the higher end in the near future. This scenario has been recognized as “Brain Gain from Brain Drain” and brain gain brings with it greater challenges for the employees returning to India. The major challenges foreseen are:

• The Indian government has to make necessary arrangements to employ these resources in the optimum way.
• The Indians returning will face challenge of getting jobs in India to meet their quality and expectations.
• The adaptability to Indian corporate work culture by these employees will also be a matter of concern, specifically with people in the middle managerial experience.

Brain Gain to India – the predicted outcome of Trump’s protectionist policy will bring about serious disequilibrium to Indian economy, which might have its impact on the various sectors and government policy actions. The question is how far is India getting ready to face the challenge and what are the remedial measures built to bring back the equilibrium of the economy?