There's more. Currently, the annual quota of 65,000 visas -- plus another 20,000 for employees with advanced U.S. degrees -- is awarded by lottery. If the process becomes market-based, with better-paying employers getting priority, Apple Inc., Alphabet Inc., Amazon.com Inc. and Microsoft Corp. could end up hiring more engineers from India, Ireland or China.
Infosys and TCS, historically among the top three visa sponsors, would either have to increase wages, or settle for a much reduced scale of business in their most important market.
Suppose they do the former. Infosys paid an average $81,000 to the 25,375 applicants it sponsored last year. If the Bangalore-based company had to raise the salary to $130,000 for the same number of U.S. visas, $1.2 billion would be added to its labor bill. If Infosys can't pass that cost on to customers, almost half its annual operating profit would disappear.
In reality, things won't be that dire. Outsourcing companies will hire more local workers in the U.S., especially in places where it's cheaper to live. Full-time employee costs are 20 percent lower in Dallas than in San Francisco, for example. In addition, Indian vendors will persuade clients to send more work offshore to India, where labor charges are one-sixth of Denver.
It might have narrowed, regardless. As clients spend more on artificial intelligence, analytics, mobile and cloud, the budget for legacy IT services, such as application maintenance, declines. Indian companies woke up late to this new opportunity. As a result, they've had to invest at a substantially higher rate to gain market share.
Or at least play catch-up. The top four digital ad agencies are Accenture Interactive, IBM Interactive, Deloitte Digital and Epsilon, which, as Bloomberg Intelligence's Alex Wisch notes, have all been spawned by consulting firms. IBM, meanwhile, predicts that analytics alone will be a $315 billion market by next year, roughly triple the size of India's IT exports.
Investors are nervous about any margin sacrifice a battle for new technologies would entail. TCS is trading below 16 times expected earnings, the lowest since the 2008 financial crisis. Infosys is faring even worse. Trump hasn't brought India's outsourcing industry to the brink; but his anti-immigration stance may push it over.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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