Protectionism blues for the Indian IT industry

Even before taking oath as US president, Donald Trump had made his protectionist stance on US trade extremely clear, much to the dismay and delight of Wall Street and Main Street respectively. Further, the Brexit referendum and the renewed strains from Greece and Italy are clear signals that many European countries are disenchanted with the promises of capitalism. Consequently, populist yet economically illiterate measures like protectionism are finding greater acceptance with the people. Meanwhile, economists across the globe have been busy pleading for a reversal of these ring-fencing measures, as the sole recourse to prevent a sudden and precipitous drop in global trade. However, global leaders have paid little heed to these warnings. Consider the recent order by Australian Prime Minister Malcolm Turnbull, who last month, axed a visa programme under which 95,000 temporary workers — most of them Indians — were allowed to work in the country. The order has sent shivers down the spine of the Indian IT industry; its hands already full, dealing with an offensive against H1B visas launched by the Trump administration. With President Trump showing no signs of reversing his position, Infosys has committed to hiring 10,000 American workers in the next two years. Indian engineers, meanwhile, are living in dread of being handed the pink slip. Last month, Wipro fired over 600 employees. For the first nine months of 2016, Infosys had only hired 5,700 people, down from 17,000 employees hired in 2015. Reportedly, Cognizant has also set its eyes on firing anywhere between 6,000 to 10,000 employees. This clutch of firings is sure to affect the Indian economy. Currently, India’s top four IT companies spend over Rs 1.16 lakh crore on salaries and employ around one million people. A dent in the employability of these professionals will have a far-reaching systemic effect on a host of sectors from housing, auto, FMCG to bank credit offtake. The Centre has to act now or risk losing the benefits of its reforms to an economic slowdown.