Donald Trump’s threat to Indian IT is all bluster
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Does the election of Donald Trump as the next US president pose a threat to India’s IT industry? On several occasions during the course of his frenzied campaign the president elect blamed India for taking away jobs from Americans, pledging to bring them back if elected president. In one of his speeches he was more specific: “I want to scrap all H-1B visas”. It has been a constant theme for him. In his 2011 book Time To Get Tough, Trump advocated a 15% tax on US companies for outsourcing jobs to places like India.
Any such move would impact India’s massive $82 billion-worth of software services exports (figure for the financial year ending March 2015, according to the Reserve Bank of India) since a major chunk of that, 60%, came from the US.
Thankfully, much need not be read into Trump’s campaign rhetoric on the matter. Before he was elected, US president Barack Obama too had been equally vocal and unrelenting in his campaign against outsourcing, stating that his administration would offer tax benefits only to those firms which would create jobs in the country.
Once he was in office though, the natural order of outsourcing stayed in place and IT companies, despite occasional noises about the number of H1B visas available, got about their business as usual.
US job watchers too had other issues to focus on.
The Investigative Reporting Workshop, in coordination with ABC’s World News Tonight and the Watchdog Institute, gathered that money from the 2009 stimulus bill to help support the renewable energy industry largely went to creating jobs overseas. While the stimulus money did create dozens of jobs in the US, it ended up creating thousands more for countries like China.
Trump will have to look elsewhere when he seeks a punching bag for the unemployed youth in that country. Sadly, he will find that the problem lies within, in schools and colleges. As the world learnt at great cost, he knows his constituency better than anyone else. It comprises mostly young people who don’t have a college degree. That’s hardly the kind of person who could replace a trained engineer from India or anywhere else.
Despite the strong demand for software developers as well as high salaries on offer, the trend for computer science degrees as a percentage of all US college degrees awarded has been pretty flat over the last 30 years, stagnating at 2.76% in 2011 as compared to 2.2% in 1981, according to data from the National Center for Educational Statistics’ Digest of Educational Statistics. More recent data from the National Student Clearinghouse Research Center shows that only one in 12 American students pursue an undergraduate degree in computers science.
Contrast that with students who arrive from other countries, primarily China, India and South Korea. At the undergraduate level, while international students during that same time period received 3.5% of all bachelor’s degrees, they received 10% of bachelor’s degrees in mathematics and statistics, 9% of bachelor’s degrees in mechanic and repair technologies, and 8% of bachelor’s engineering degrees. Parsing that data further, it is easy to see why an IBM or Accenture or even Apple gives its coveted jobs to Indians.
While the Chinese lead with 31% of all international students in the US, 28% of them were studying business and management and 20% were studying engineering. India sent the second highest number of students to the US, but 38% of them were studying engineering and 26% were studying math and computer science.
Up the academic ladder, the figures get even more skewed. According to data from the National Center for Education Statistics, international students earned 11.6% of all American doctoral degrees conferred during the 2012-13 academic year. More pertinently, they bag 57% of the doctoral degrees in engineering, 53% in computer and information sciences and 50% in mathematics and statistics.
The plain fact is Indians don’t take up jobs that should have gone to Americans.
Rather they do the jobs not enough Americans are qualified to do.
India’s IT and business process outsourcing (BPO) companies are already facing major challenges stemming from newer technologies such as automation and robotics. Client spends have also been going down for a variety of reasons. But Trump’s campaign threats are unlikely to cause too many worries.
Corporate America needs Indian engineers. If Trump wants evidence of that he need look no further than the two poster boys of US tech excellence, Google and Microsoft, both of which are headed by Indian engineers.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
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