US President Donald Trump’s view on H1B-visa is rattling the Indian information technology (IT) sector and the uncertain policies of the new president is making the IT players nervous. The pressure on the IT companies is building and industry lobby body Nasscom said the sector will grow at the lower end of its revised target in fiscal 2017.
Talking to CNBC-TV18 on the sidelines of the NASSCOM conference, CP Gurnani said nothing new changes their guidance and by end of May or early June they would give their annual guidance.
He also said that presently their guidance stays within 8-10 percent.
NASSCOM president R Chandrasekhar said that it is important to look beyond narrow issues of H1B visas. He said the larger question is the appointment of the new President in the White House and its impact on the US economy and its global implications.
Below is the verbatim transcript of the discussion.
Q: Damned if you do and damned if you don’t, you have decided to hold back on giving out a guidance for now at Nasscom because perhaps this is the pragmatic thing to do because anyway when you were giving out the guidance, you had to revise it downwards. So, maybe this is the smart thing to do at this point in time saying that we don’t really know what the outlook holds?
Gurnani: There is another way of putting it. In November we gave you a guidance which said 8-10 percent. We also have statistically shared with you that our growth rate would be 8.7 percent. There is nothing new which changes our guidance right now and we believe that between November and February was too short a time for us to give you any new data.
So, we said, why don’t we wait for the annual results of most of the companies; we have spoken to the various agencies, various industry bodies which help us and they believe end of May, early June would be a good time for us to give an annual guidance.
Q: Do you believe 8-10 percent will hold?
Gurnani: We believe as of date our guidance stays within 8-10 percent.
Q: What would be the big risk at this point in time, I spoke about Brexit, I spoke about Trump – largely speculation at this point in time on what president Trump may or may not do, will there be an executive order, there hasn’t been one, there have been more bills that have been moved which is something that we have got accustomed to in the past as well. Will it be USD 1,00,000 as far as minimum wages is concerned linked to the H1B, these are questions that we don’t have answers to today. What would you say are the biggest risks facing the industry?
Chandrashekhar: I think when you look at the risks, you have to look beyond just the narrow issues of visas and H1B visas. Let us just have a sense of proportion here. The total number of visas which are issued to Indian companies are about 15,000 a year, the new ones, in an industry of 4 million people. So that gives you an idea of relative importance of this issue to the totality of the industry. The larger questions when you look at the new President in the White House is what impact this would have on their economy as a whole, contrary maybe to some of the earlier expectations, the market has actually reacted very positively.
The other question is what implications it could have for the global economy. Clearly some of the actions that could be taken could have far reaching implications across different parts of the globe. Then we are seeing a little bit of turbulence in terms of the different economies across the world. We are also seeing turbulence in the currencies, so, all of these I think are still subject to a fair amount of variation because nobody is really sure of how all this will play out. I think collectively all of these issues have probably larger implication for the industry.
If you take Brexit as a different example, till the vote happened, the uncertainty was will it happen or won’t it happen. Now, we have settled into a certain level of uncertainty which is now a given, okay let us wait till the terms come out and how all the players are positioning themselves, etc. So, I think that is the early part of that situation is what we are in as far as US is concerned. So, these are I think the larger uncertainties that we need to keep in mind.
Q: You have met with the commerce minister, we understand that the Indian government is taking this up with the US administration, what is the sense that you get on the likelihood of an executive order when it comes to H1B, whether or not the threat is exaggerated is a separate story, but what is the comfort level at this point in time on whether we will see any legislative action by way of an executive order?
Chandrashekhar: I think first of all legislative action by way of an executive order is a bit of an oxymoron because the executive order is an action as the name suggests by the executive, by the administration and legislative action is through the legislative which in the US actually are two very distinct and more or less independent arms unlike in India where the executive actually initiates legislation. So, I will separate the two things.
The executive action, nobody really knows whether it is going to happen tomorrow or after one week or after months or not at all. So, it is really an unknown. However, the fact is that that has the potential of happening in a very short time frame. Legislative action on the other hand has a longer timeframe but would have far reaching implications.
However, it is not an easy road because there are different political perspectives, there is the old debate of whether it should be high skills immigration alone or comprehensive immigration and there are competing political views as well, not to mention related but somewhat different set of issues like whether you should have a wall or not, whether you should have border security. So, I think that at this point, as far as the executive order is concerned, it is impossible to really say it is going to happen or not going to happen. We have to wait and see, I think we just have to watch for what happens.
Q: Are you planning to take a leaf out of Nasscom’s book and what some of your other peers have been doing is not give out a guidance and that is where this now seems to be veering towards, are we going to see everybody say we don’t know, we are not giving out guidance anymore. FY17 constant currency guidance for you is between 8.4-8.8 percent. Sticking to the path of giving out guidance?
Rao: Right now we are in the process of collecting information. Typically this is the period when we look at both bottom-up and top-down. We talk to our clients as well as we talk to our client facing group and look at it. So, at the time of April, at the time of results is typically when we give the guidance. So, at this stage there is no debate on not giving or anything. So, we are going ahead, continuing to go with our consistent process of getting all the inputs and trying to do the forecast.