The positive impact of “Gang of 8″ – US Immigration Bill

The ‘Gang of 8’ immigration bill being discussed by the US Senate has kicked up quite a storm. There is a lot of conversation around its provisions, impact on illegal migrants, skilled workers, H1B Visas etc. The last one was of specific interest to us at IT Exchange. It can be viewed as a threat or an opportunity for the Indian IT industry. We view it as an opportunity.

The immigration bill’s direct impact could be on the costs for the IT companies. The  IT firms will have to hike the salaries of their local US workers, companies with over 50% of their staff on H-1B visas will have to pay $10,000 per visa and starting from 2014, companies with over 75% of staff as guest workers in the US will be banned from applying for new H-1B visas. Not everything is bad news though, the number of Visas are going up!

So what are the options for companies in the US? Considering the demand for IT work in US, the domestic outsourcing industry may not be equipped to service the entire demand, thus US companies will continue to outsource to India and other low cost locations.

The IT outsourcing world today is flat, where communication and collaboration is easier. Cloud, video-conferencing, instant messaging, file-sharing etc has made working remotely convenient and efficient. It is likely that both big and small IT servicing companies will try to leverage these resources to provide remote servicing as far as possible. Gartner analysts too have noted this trend and expect IT services companies to innovate, further automate and deliver remotely.

It is also likely that top non US IT firms specially from India, will consider globalizing their workforce either by hiring more locals or by acquiring local firms. By doing this, they will not be able to service at a lower cost by servicing from US market and points to a trend where Indian IT companies are likely to compete on other attributes, besides costs. Industry experts say herein lies the opportunity for Indian IT firms to increase their global footprint and discard their low-cost image.

In this Ying and Yang between cost and quality, domestic versus offshore outsourcing, the entire outsourcing ecosystem is witnessing positive changes. While the Indian IT giants will set the tone, the small IT service providers in low-cost countries are likely to reap the benefits of growing demand for remotely serviced IT solutions.