Offshore Outsourcing and Policy Changes under the Trump Administration

January 11, 2017 6:11 pm | Updated 1 year ago.

Are the expected policies under new Trump Administration all bad for the outsourcing industry?

The key message that President-elect Trump has given during his presidential campaign is that his administration will create more jobs for Americans. An analysis of new jobs created during the tenure of various US Presidents will indicate that maximum number of new jobs in the last 2 decades was created under President Clinton (1993 – 97: 12.3 Million new jobs, 1997 – 2001: 11.3 Million new jobs) followed by President Barack Obama ( 2013-16: 10 Million new jobs). The number of new jobs created during the tenure of President Obama  (2009 – 2013: 1.3 Million new jobs, 2013 – 16: 10 Million new jobs) is of critical significance as this helped America to recover from the financial meltdown caused by the subprime crisis in 2008. The policies of new Trump Administration will have to measure their success in creating new jobs for Americans against these numbers.

The new Trump Administration will, therefore, adopt policies that will create an environment for rapid new job creation. While some of the manufacturing jobs can be brought back from other countries like Mexico and China, the nature of these jobs will be significantly different from what it used to be a decade ago, primarily due to technology innovations and automation. The skills gap can to some extent be managed by re-skilling the American workers, but to a large extent may require external talent to be brought in.  A similar scenario may exist in the Service Sector as well. While the US Government over the last 5 years has focused on STEM (Science, Technology, Engineering, and Mathematics) education in the US to create skills to meet the job requirement in the digital age, there will still be a large skills and talent requirement from other countries to meet the growing technology needs of American companies. It is, therefore, D2E’ opinion that the Trump Administration, in addition to trying to bring jobs back to America, will create an environment that is conducive to new job creation and the offshore service providers can play a significant role in this space.

The offshore vendors, instead of simply pushing to take projects offshore need to look at the engagements strategically and execute portions of the projects in the USA leveraging American skills and talent; and taking the remaining part of the project offshore where it makes strategic sense to both the client and the offshore vendor. Granted this will reduce the profit margin of the offshore vendors to some extent, but can be a win-win situation for both the US clients and the offshore vendors in long term.

The offshore vendors should also invest in R&D Centers in the USA, either of their own or in collaboration with major US Universities. This will not only show their commitment to the US technology industry but also will give the offshore vendors access to some of the cutting edge technology being developed in these major universities, a win-win situation for everyone.

While we can go on listing several such initiatives from the offshore vendors that will be greatly appreciated by the new Trump administration, suffice it to say that going forward it will need to be a two-way street where the offshore vendors will need to contribute to the US market to get deep access to the business of the US clients.

D2E’ Aggregator platform is fully aligned to this.