IT stocks slumps as Trump leads

With Republican candidate Donald Trump almost certain to walk into the White House, the impact was evident across global markets. This was especially evident on the Indian IT industries stock performance in the morning. With Trump leading the US presidential elections so far, stock prices of IT bellwethers such as Tata Consultancy Services (TCS), Infosys, Wipro, HCL Technologies, Tech Mahindra were down 4.15%, 2.43%, 3.19%, 3%, and 5% respectively in the early trading hours. IT stocks slumps For the $150 billion IT services industry a Trump victory will only add to its woes and challenges the industry is facing on growth due to automation and technology disruption. Trump right from the start of his campaign days has stated that he wants to bring jobs back to the US. This includes both the manufacturing jobs that China has taken away and employment in tech industries that has come to India.
For instance, two days back in Minneapolis he said that he will impose 35% tax on companies like IBM who cuts jobs in the US and send them to India. “IBM laid off 500 workers in Minneapolis and moved their jobs to India and other countries. A Trump administration will stop the jobs from leaving America, and we will stop the jobs from leaving Minnesota. If a company wants to leave Minnesota, fire their workers and move to another country and then ship their products back into the United States, we will make them pay a 35% tax. We will also unleash American energy including shale oil, natural gas and clean coal,” Trump said in his speech in Minneapolis as reported by Business Insider. Nasscom, the IT industry body is still hoping and being positive even on a Trump victory. “Overall, I would say fairly positive for India. Primarily because he had said that India and US would be the best friends if he were to become the President. He had also said that this relationship would be the most important one for the US. He did make certain comments with regard to high-skilled immigration, but we believe those were based on certain fabrications fed to him by critics of the IT industry. When the actual administration comes in, then they would be confronted with the imperatives of spurring economic growth in the US and in that technology has a big role and adoption of technology is the key method by which US corporates stay globally competitive. Indian IT industry plays a big role there,” said R Chandrashekhar, President, Nasscom.
Experts tracking the industry and the campaign trail of both Democratic candidate Hillary Clinton and Republican Donald Trump feel that whether such drastic steps will be taken will have to be seen, however in the short-term hike in visa fees could be possibility. Peter Bendour-Samuel, CEO of Everest Group, shares that both Trump and Clinton have made numerous statements aimed at curbing globalization. Having said that it is hard for a president to make serous changes which would affect the Indian IT servicers industry without the full support of both houses of congress. “However, the one area where they can affect the Industry is in Immigration and visa’s. Here the two candidates differ widely. Clinton is on the record as far more pro-immigration and open boarders whereas Trump seems to want to “build a wall” and substantially curtail immigration and make restrict visa access. This is an important area for the Indian IT industry as their current model depends on open boarder immigration visa’s. With all the rhetoric the bureaucrats which administer visas have become much more difficult to deal with and their actions have already started to complicate the Indian IT business model. It is reasonable to expect that under a Trump administration this might be taken to a higher level and the friction which results would place an increased head wind on an industry already reeling from the slower growth and the impacts of automation and cognitive computing. Under almost any scenario the Indian industry will be able to adapt but under it may find increased headwinds under an administration which is restricting visa access,” added Samuel in an email statement on the possible winner of the US presidential elections. At this point of time, experts feel, that even a hike in visa fees will impact the IT industry in negative. In January this year, The U.S. Citizenship and Immigration Service (USCIS) had announced a hike in visa fees to $4,000 for the H1-B category and the L-1A and L-1B visa applicants had to bear an additional fee of $4,500. These changes have already impacted the profitability of the Indian IT sector.

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