India’s expansive information technology outsourcing sector is eyeing a potential renaissance under a second Donald Trump presidency, as the industry, which generates more than half its revenues from the US, anticipates increased customer spending driven by proposed business incentives.
The $128bn annual revenue back-office and consultancy sector, spanning vast campuses across metropolitan hubs from Bengaluru to Pune, sees promising opportunities in its largest market following years of sluggish demand. Tech Mahindra’s Chief Operating Officer, Atul Soneja, expressed optimism, noting Trump’s business-friendly approach could yield significant benefits for the sector.
The industry, employing more than 5 million people, represents a crucial segment of India’s globally-oriented economy. While the sector experienced substantial growth during the pandemic as clients invested heavily in digital services, recent global economic pressures have led to reduced corporate spending and subsequent challenges for Indian tech giants.
Tata Consultancy Services, India’s premier IT company, recently reported its fifth consecutive quarterly revenue decline in North America. However, the company’s chief executive, K Krithivasan, projects improved performance, partly attributed to enhanced client spending anticipated under Trump’s administration.
Industry leaders, including Infosys chairman Nandan Nilekani and Wipro chair Rishad Premji, share positive sentiments regarding Trump’s pro-business stance. HSBC analysts forecast industry growth acceleration to 6 per cent in the next financial year, up from 3-4 per cent over the past two years.
Despite optimistic projections, potential challenges loom. Trump’s “America First” protectionist policies could impose significant tariffs, potentially hampering growth and fuelling inflation. The industry has already adapted to previous visa restrictions by reducing dependency on H1-B workers to less than 1 per cent of their workforce.
The sector’s resilience, coupled with strong Indo-US diplomatic relations and Prime Minister Modi’s rapport with Trump, suggests India’s IT industry might weather potential policy headwinds better than other Asian counterparts. As Teresa John from Nirmal Bang notes, India’s position appears relatively insulated compared to nations like China, given its lower trade surplus with the US.
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