US tech curbs may shift high-value work to India: Vineet Nayar

Former HCL CEO Vineet Nayar says US restrictions on tech firms using the PERM program could unexpectedly boost India's IT sector by shifting high-value work like AI and product engineering to India, moving beyond traditional outsourcing models.

US restrictions on Indian technology professionals could encourage American companies to shift more high-value technology work to India, including artificial intelligence (AI), product engineering and cybersecurity, former HCL Technologies CEO Vineet Nayar said.

In a post on X, Nayar said the US move to restrict several major technology companies from using the Permanent Labour Certification Program (PERM) could have an unintended impact by accelerating the transfer of technology work to India.

“America is making it harder to move Indian talent there, while technology is making it easier for smaller teams in India to take responsibility for increasingly sophisticated work,” Nayar said He noted that Indian IT companies accounted for fewer than 1,400 of the 117,849 PERM certifications issued last year, representing less than 2 per cent of the total. This, he said, suggests that the direct impact on Indian IT firms could be limited.

A New Phase for Indian IT

Nayar said the Indian IT industry could be entering a new phase, moving beyond its traditional model of sending engineers to client locations in the US and gradually shifting work to India.

The next stage, he said, could see Indian teams taking greater responsibility for designing and developing technology, rather than simply executing instructions from overseas clients. “The opportunity is architecture, product engineering, cybersecurity, AI implementation, industry solutions and eventually ownership of products and IP,” he said.

US Government Announces Restrictions

The remarks come after the US government announced restrictions on several major technology and outsourcing companies, including Tata Consultancy Services (TCS), Infosys, Wipro, HCL Technologies and Cognizant, under the PERM programme amid investigations into alleged misuse of the system. US technology companies Microsoft and Adobe were also named in the action.

US Labour Secretary Keith Sonderling said the companies had collectively sought millions of foreign workers and received hundreds of thousands of H-1B visa approvals and permanent labour certifications. He said the action was aimed at addressing concerns over foreign hiring and protecting American workers.

TCS Responds

TCS said it would comply with any directive issued by the US Department of Labour, adding that its workforce strategy in the country was based on local hiring. The company said its PERM applications had remained in single digits over the previous two years and that it did not expect the suspension to affect its workforce strategy or customer engagements. TCS also reiterated its plan to hire an additional 15,000 employees in the US over five years.

Future Growth and the AI Factor

Nayar also cautioned that artificial intelligence could weaken the traditional relationship between business growth and employment in the Indian IT sector.

“For thirty years, Indian IT competed largely on the cost of Indian talent. The next thirty will depend on the capability of Indian talent,” he said.

He added that the industry's future growth would depend on its ability to develop products, build a larger pool of technology architects and shift more global technology decision-making to India. This could help Indian IT companies generate greater value per employee, even if employment growth does not keep pace with business expansion. (ANI)

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