Monday, March 9, 2009

Obama ban on outsourcing and H1 Visas: Blessing in Disguise for Product Companies and India

Obama’s plan for increasing employment in US by banning outsourcing and capping H1 B Visas may well turn out to be a Blessing in Disguise for India.

If Obama discourages companies to outsource, then companies will have a choice either do work in house in US or outsource the work to companies in US. Both the above solutions will not be economically attractive, so companies will have to reconsider Make Vs Buy option and increasingly rely on third party products rather than in-house customized IT solutions.

This move of Obama might turn out to be a boon for Product Companies worldwide. Product Companies will look for specialized resources and when difficult to get thru H1 B Visas, these companies will look to augment resources in their offshore development centers in India and other countries. This global resource augmentation move will be a boon for product development centers in India.

For long, analysts and pundits were arguing against low value strategy of Indian IT industry i.e. relying on services revenue. For long term sustainability, they analyzed that Indian IT industry need to move up high value segments products. The opportunity might come now.

What will this plan mean to IT services companies?

IT Services Companies should look for diversifying into products and IP/ Product based solutions (As I wrote in my earlier post, How Indian Companies Can Break Revenue Linearity)

What will this plan mean to students looking forward to enter into IT industry?

Fresh Employment in will be tough in IT services companies.

So students should prepare themselves for career in Product Companies. Give GRE or GATE and go for MS or M.Tech. Do good R&D projects, learn new technologies and set your self for Product Career.

Obama’s ban on outsourcing H1 visas may turn out to be blessing in disguise for India. India has benefited in the past from such blessings in disguise like Import substitution policy of Nehru, Continuing of English Medium Education, Bank Nationalization etc. This all led to creation of English speaking technical manpower in India and conservative yet stable financial system. Current crisis may prove to be an opportunity for India to move up in its technical capabilities and increase its attractiveness for becoming centre of excellence for Product Companies.

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