Debasis Mohapatra
Bengaluru, 5 November 2024
The US Presidential election has made investors nervous worldwide. And India is no exception. The world is bracing for policy changes whoever comes to power in the world’s largest economy that is going to polls on today (November 5).
In this perspective, Indian IT industry, which draws more than half of its revenues from the US, is eagerly waiting for the outcome of the presidential results in the coming days. Especially, economic policies of the next administration are likely to drive technology spending in coming quarters.
Key issues under focus:
There are several issues that Indian IT industry will have an eye whenever the new American President takes over. These are:
H1B Visa:
This is the most critical issue on which Indian and global IT players have critical dependency. IT firms send Indian engineers to client locations in the US under the H1B visa. In his last term, Donald Trump had imposed strict H1B visa norms, making it difficult for technology companies to send engineers to the US. It is to be seen whether he follows the same stricter policy if elected to power. As compared to Trump, Democratic candidate, Kamala Harris is likely to be flexible in allowing professional immigration to the US. However, this issue has been eased a lot in recent years as Indian IT firms have aggressively hired US locals for manning operations in the country. They have also actively promoted STEM (science, technology, engineering & mathematics) education among American students for creating a robust pipeline of talent.
Technology spending:
Technology spending is dependent on the overall growth of the US economy. The American enterprises have held back discretionary spend in the technology field for last three years owing to high inflation. As inflation eases with first rate cut executed by the US Federal Reserve, the US companies are likely to see revival in consumer demand. Whoever comes to power in these elections, policies with regard to taxation will play a critical role in reviving demand environment. Trump has assured the American companies of lowering taxation rate, that will support growth. In the meantime, Kamala Harris has promised more business-friendly measures for the industry. It has to be seen how these policies plan out in the coming months.
Geopolitical stability:
The American policies largely determine the geopolitical stability across the world. Currently, Russia-Ukraine war and Middle East conflicts are roiling the world. These have worsened the demand situation in Europe and many other parts of the world. The next American President’s policies towards bringing in a much-needed geopolitical stability by ending these conflicts will be critical in driving the global growth. These outcomes will have direct impact on crude oil prices, inflation and interest rates globally. Therefore, whether Trump or Harris, the global technology industry will watch the next moves of the upcoming US President for future strategies.
