GS Paper II Bilateral, regional agreements involving India and/or affecting India’s interests.

A second chance

India’s IT sector should convert Trump’s tough visa stance into an opportunity to rejig its business model

What’s Happening-

  • The brouhaha (noise) over Donald Trump’s move to enforce tighter immigration laws and a stricter H-1B visa regime exposes the chinks in the business models adopted by the Indian IT services sector.

Key Points discussed were:

Low Cost Skilled Labour:

  • For too long, IT services companies have relied on shipping low-cost skilled labour to countries such as the US to drive higher margins.
  • Approximately 57 per cent of the revenue is generated from on-site projects executed mostly through import of skilled labour from India.
  • IT companies argue that shortage of STEM skills (science, technology, engineering and math) in the US dominates the list of reasons for sending people on work visas.
  • The real reason is that most companies in the IT sector have become heavily dependent on sending workers to countries where there is profit to be made just on wage arbitrage.
  • The US, for example, contributes 62 per cent of the $110 billion earned by IT firms from exports.

Reluctance to Shift:

  • Low cost skilled model has led to a situation where Indian IT firms have become global experts in executing low-value projects but are finding it difficult to move up the value chain — switching over to new transformational platforms such as robotics, artificial intelligence and automation.
  • To be fair, a number of large IT firms have been trying to change their business models to be ready for these new technologies. But the shift has not been fast enough.
  • Therefore, Indian IT firms should see the tightening visa rules as a blessing in disguise.

New Measures to be Taken by IT industry:

  • Instead of pleading with the US government for relaxation, Indian IT firms should look inward to do three things on priority.
  1. Abandon the path of sending workers from India, and focus on near-shore delivery in key markets.
  2. Reduce dependence on a few countries by spreading the business to more geographies, including the domestic market. India accounts for less than 10 per cent of the revenues for most large IT companies.
  3. Adopt business models that are in tune with the changing paradigm.

GS Paper II Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

Single-dose Zika vaccine works in animals: Study

What’s Happening-
An innovative vaccine made from genetic material protected lab animals from the Zika virus in experiments, scientists reported on Thursday, calling it a “promising” lead in fighting the threat to humans.

Key Points discussed were:
A single, low dose of the vaccine shielded mice exposed to Zika five months after the shot
Monkeys exposed five weeks after they were innoculated were also not affected by the virus.
observed rapid and durable protective immunity without adverse events
Zika erupted on a large scale in mid-2015 and more than 1.5 million people have been infected.