Economic Survey flags immigration issue for IT-BPM sector

New Delhi: With the Indian IT and business process management (IT-BPM) sector feeling the pinch of global slowdown, the Economic Survey on Friday hit out at "misconstruing mobility of skilled people as an immigration issue", saying it has become a deterrent to growth of global business.

The mid-year Survey termed market access, competition from new entrants, job losses and lack of skilled talent and infrastructure as major challenges for the country's IT-BPM sector.

However, India's IT-BPM exports are expected to reach USD 117 billion, with a growth of 7.6 percent, while the government's rapid adoption of technologies as a platform to delivery of government-to-government and government-to-citizen services is "a tremendous push factor for the domestic IT-BPM market".

On hurdles before the sector, the Survey said: "The IT- BPM industry is also feeling the pinch of the global slowdown and global political uncertainties as clients go slow on their decision-making and investment processes."

Referring to market access, it said: "Misconstruing mobility of skilled people as an immigration issue is a deterrent to the growth of this global business resulting in many barriers to free movement of skill and data in the major markets."

Citing the example of the US, it said the "Buy American, Hire American" Presidential executive order called for the collection of data, increased oversight and enforcement actions, and the development of administration plans to reform and curtail the high skill visa programmes.

Among others, it said US Citizenship and Immigration Services introduced a policy memo on H-1B usage, wherein 'computer programmers' do not automatically qualify as specialty occupations.

The Survey further said the EU has also introduced Data Protection and Privacy Rules that effectively prevent Indian companies from providing services from India while the US has been given safe harbour status.

On competition from new entrants, it said the Indian service companies which gained scale over the last decade as disrupters, creating the modern offshoring industry, were now being challenged by a slew of specialised and niche start-ups bred in the new environment.

"The niche players are creating highly specialised solutions that address very specific use cases or problems for their clients," it added.

On the challenges of job losses, the Survey noted that the growth in digital technologies like cloud-based services is happening at a much faster pace and companies have to learn new technologies and reskill.

Citing the World Bank (2016) report, it said automation threatened 69 per cent of jobs in India while it threatened 77 per cent in China and 85 per cent in Ethiopia.

Labour Bureau of India data indicate that changes in employment in the IT-BPO sector during April to December 2016 was only 0.22 lakh. Thus, there is a gentle deceleration in net hiring growth rate, it added.

There were, the Survey said, also some domestic challenges like shortage of skilled digital talent, underdeveloped infrastructure in tier 2 and 3 cities and some restrictive regulations for product startups.