Go local and go lobby!

During every US election since 2004, I have been asked by Nervous Nellies both in the press and in the IT services industry whether the prolonged harangue about immigration reform and protectionism against free trade bellowed out by candidates is in fact something that would affect India’s technology services industry. The questions usually focus around curbs on the H1 visa programme of the United States and several similar visa programmes in countries such as the UK and Australia, which have institutionalized ways of importing technically skilled workers into their economies for short periods of time in order to do jobs that locals can’t do. Or even if they can, locals are not available in sufficient numbers for the country to get all its tasks done.

I used to argue that the decibel level around immigration and trade barriers is one that follows a four-year cycle of peaks and valleys, peaking right before an election after which the deafening roar becomes just a distant rumble. In other words, candidates stand at their pulpits promising more local jobs, and swing hard at the piñata of immigration, hoping that by striking it, they could land a bunch of gullible voters to cast their votes in favour of the piñata man. After the election is decided, the world goes back to business as usual, and the H1 visas get issued in much the same, if not larger, numbers than before.

Protectionism and harangues about immigration are no longer just election-year rhetoric. The world changed inexorably in 2016. The backlash from the dispossessed white populace in countries such as Britain and America has created a new world order that one needs to accept and adjust to. While globalization and trade are far from dead, they have probably been knocked into a different playing field, where the rules are different, and the players have become more rough. It is as if the comparatively genteel game of American football has been transformed into a rugby scrum. And a rugby scrum is nothing like the scrums of “Agile Computing” which our Indian IT firms are well versed in. It is much more bloody and violent.

A pragmatic response is required. New umpires and new rules just mean that adjustments in one’s style of playing need to be made. The Indian IT industry would do very well to look at the late 1970s and early ’80s when the backlash against Japanese-made automobiles in the US and other parts of the Western world was very high. Parking lots in the same rust belt that has voted Trump into office had printed signs aimed at owners of Japanese marques like Honda, Nissan and Toyota that said “Park Your Import Elsewhere”.

In just a few years, these Japanese car makers transformed themselves into firms that had the capability to manufacture their cars locally, while still retaining their unique engineering and design advantages that allowed them to introduce completely new models in the market every four years versus the Germans and Americans who could only manage a complete model change every seven to eight years.

Apart from going local—at least with manufacturing plants—thereby allowing themselves to be seen as local employers—the Japanese also set about lobbying America’s lawmakers with great dexterity. Even a cursory review of the Internet to check lobbying activity by companies such as Honda and Toyota in the US reveals that millions of dollars have been spent by each firm, with a great deal of regularity, every year over the past several years.

When compared with those large sums, most Indian IT service providers, who have much at stake, have been stingy. The only notable exception is Cognizant, which in one recent year spent over $2 million. Around the same time, Tata Consultancy Services spent about $80,000, and its Bengaluru rival Wipro about $460,000—while Infosys’ spending was $5,000, or about the price of a business class return trip from the US to India for one of its executives.

Lobbying has a negative connotation in India because it conjures up images of corruptible politicians. But in countries such as the US, where lobbying is legal, transparency laws allow for the disclosure of monetary contributions to lawmakers made by companies and their allied political action committees. Also, targeted educational information in the hands of a skilled lobbyist can be a great weapon when influencing lawmakers to make up their minds on an issue.

For instance, one figure touted by McKinsey and Co. some years ago was that for every $1 spent on offshoring, the total economic gain was actually approximately $1.45, with the US capturing approximately $1.12 of that gain, while the receiving country (India or the Philippines) captured the remaining 33 cents. Getting such information to lobbyists who educate lawmakers in the nuances of such calculations can only be of value for Indian IT service providers. And this education, coming on top of local employment created in the lawmaker’s constituency by the outsourcer, is a winning combination when it comes to lawmakers setting up laws that favour the continuance of smooth international trade in IT services.

Brexit and a Trump presidency were both not predicted by the pollsters, so dealing with these black swans is now a reality. Indian IT outsourcers have left the lobbying to their trade body Nasscom for too long, in the hope that, like in past election years, “this too shall pass”. It is time they took matters into their own hands.

Siddharth Pai is a world-renowned technology consultant who has personally led over $20 billion in complex, first-of-a-kind outsourcing transactions.