H-1B ecosystem mainly benefits US firms more than Indian ones: Nasscom Prez

While India has always been recognized for its talent, we must now deepen our technology skillsets to drive growth

Rajesh Nambiar, president of Nasscom, believes that despite the industry facing several headwinds — such as geopolitical challenges, rising regulatory demands, and rapid technological disruptions — the opportunities presented by artificial intelligence (AI) signal the right time for the sector to evolve. In a virtual interview with Shivani Shinde, Nambiar discusses Nasscom’s priorities, the talent gap, and the future of the industry. Edited excerpts:

 

Q: What will be the focus of Nasscom under your leadership?

 

As we reimagine the industry, our number one priority is to continue accelerating growth. It is essential to identify and drive the next wave of growth opportunities. For instance, over the last year or more, we have been talking about AI and GenAI. Can we now transition from proof-of-concept (PoC) projects to measurable returns? Another would be establishing India as a global centre for innovation and R&D (research and development), and not just for talent.

 

The second priority is skills. While India has always been recognised for its talent, we must now deepen our technology skillsets to drive growth. This requires a shift from focusing on jobs to prioritising skills. India does not have a shortage of talent — we have many engineering graduates — but are they equipped with the right skills to meet the demands of emerging technologies like AI?

 

The third priority is preparing the industry for the next wave of disruption. We’ve experienced disruptions repeatedly, and there are more to come. Nasscom must work closely with the government and industry players to ensure preparedness.

 

Q: There is a concern that with President Donald Trump back in the US, there will be changes to immigration rules. How do you see this change impacting the industry at a time when growth is slow?

 

One of the key areas that we need to look at is to clearly distinguish between talent mobility and immigration. The latest rule, announced by the Biden administration on December 17, 2024, clarifies eligibility for H-1B work visas and marks a step in the right direction, and Nasscom has been actively advocating for balanced reforms, through multiple submissions over the past one year. It is important to recognise that the H-1B ecosystem primarily benefits US companies more than Indian organisations. Therefore, it is important for US companies to align their perspective with ours. We will continue to proactively engage with the current and the upcoming US administrations to shape policies that address the evolving global workforce demands.

 

Q: There is a growing opinion that IT services have not innovated enough. The global delivery model remains the most significant innovation. How do you address this critique, particularly in the era of AI?

 

I would partially disagree with that notion. Innovation occurs at various levels in the tech industry, and while we need to invest more in R&D, there are numerous examples of innovation here in India. For instance, the quick commerce (qcom) model is uniquely Indian, and these are tech-first companies.

 

India is also emerging as a global hub for services innovation, as evidenced by the rapid growth of Global Capability Centres (GCCs) in the country. While the industry may have started with labour or tech arbitrage, we’ve consistently moved the needle. Today, we’re offering innovation arbitrage.

 

That said, I agree that we need to improve our patent filings and increase investments in R&D. Both at national and company levels, R&D spending is currently very low. However, it’s worth noting that India accounts for nearly a quarter of the world’s engineering roles, and startups here are driving significant innovation. For instance, in 2023, 83,000 patents were filed, reflecting a 25% year-on-year (Y-o-Y) increase. The momentum is there, but there’s certainly room to do more.

 

Q: In financial year 2023 (FY23) and FY24, the industry saw a decline in headcount growth. Is this the new norm with AI? You also mentioned the importance of skills — how is the industry preparing for this shift?

 

We’ve always said that AI will not directly replace people. Instead, people with AI tools will replace those without them.

 

The industry is moving away from assessing degrees and focusing more on assessing skills. Certifications, for instance, are becoming an important way to gauge skills. Today, there’s a transformation underway in skillsets, and we’re collaborating with academia and the industry to address talent issues.

 

Q: Despite a decade of growth, entry-level salaries for engineers remain stagnant. Will Nasscom address this issue?

 

Salaries are determined by market demand. In a free-market economy like ours, companies pay what the market demands. There are reasons why entry-level salaries remain where they are. However, the same cannot be said for experienced talent — this industry continues to be one of the best-paying sectors.

 

It’s also worth noting that companies invest significantly in training and upskilling fresh talent, creating substantial value at the lower end of the pyramid. Unfortunately, we still haven’t cracked the code to make graduates industry-ready directly from academia.

 

Q: Are GCCs a threat to Indian IT players?

 

Last week, I was with Nasscom’s GCC Council, and I firmly believe this ecosystem allows GCCs and service providers to coexist and thrive together. While there may be friction at times and jobs may shift between the two, the industry has largely found ways to collaborate.

 

Initially, during the first wave of GCCs, some service providers resisted them, seeing them as competition. However, today, many services companies have developed dedicated GCC practices within their operations. The key is to create a collaborative ecosystem, and Nasscom will play a pivotal role in ensuring this balance benefits everyone.

 

Q: Y2K (Year 2000) is about to complete 25 years. Where do you see the industry in the next 25 years?

 

People often forget how the industry was before the Y2K era. That event changed how the global community perceived India’s tech industry. I remember the concerns back then — many services companies had significant Y2K-related business, which was expected to disappear after January 1, 2000. We had to reimagine the business, and that’s why I say the tech industry is incredibly resilient. We’ve faced multiple crises over the years and emerged stronger each time.

 

The next 25 years will bring even more significant transitions and opportunities. Having cracked the code for navigating tech disruptions, I believe the future will be even more fruitful for the industry.