WEBVTT - Who Loses—and Maybe Wins—From Trump’s New H-1B Fee 0:00:00.280 --> 0:00:07.240 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.280 --> 0:00:10.840 Everyone's going to be happy, and we're going to be 0:00:10.880 --> 0:00:12.000 able to keep people. 0:00:11.760 --> 0:00:14.120 In our country that are going to be very productive people, 0:00:14.640 --> 0:00:16.680 and in many cases these companies are going to pay 0:00:16.720 --> 0:00:28.320 a lot of money for that. I'm Stephanie Flanders, head 0:00:28.320 --> 0:00:32.240 of Government and Economics at Bloomberg, and welcome to Trumponomics, 0:00:32.240 --> 0:00:34.760 the podcast that looks at the economic world of Donald Trump, 0:00:35.120 --> 0:00:38.040 how he's already shaped the global economy, and what on 0:00:38.120 --> 0:00:41.680 earth is going to happen next. Well. Over the weekend, 0:00:41.800 --> 0:00:45.320 Donald Trump surprised the world by placing one hundred thousand 0:00:45.400 --> 0:00:48.680 dollars fee on the cost of an H one B 0:00:49.000 --> 0:00:53.400 visa for new employees entering the US. The short term 0:00:53.440 --> 0:00:57.200 result was travel chaos. Thousands of skilled employees working in 0:00:57.240 --> 0:00:59.040 the US on an H one B who happened to 0:00:59.080 --> 0:01:01.840 be traveling abroad were told to get back on US 0:01:01.880 --> 0:01:05.360 soil by midnight Sunday just to make sure they weren't stranded. 0:01:05.959 --> 0:01:06.119 Now. 0:01:06.160 --> 0:01:09.080 Eventually, the White House Press Secretary cleared up the confusion. 0:01:09.200 --> 0:01:12.039 The fee would only apply to new applicants, but that 0:01:12.200 --> 0:01:15.199 still left a big question hanging over the US tech 0:01:15.240 --> 0:01:18.800 companies who depend on these skilled workers and those visas 0:01:19.160 --> 0:01:22.520 to keep America at the forefront of global tech innovation, 0:01:23.120 --> 0:01:25.880 and with India accounting for seventy percent of them, it 0:01:26.000 --> 0:01:29.440 also causes a massive headache for the Indian software companies 0:01:29.560 --> 0:01:32.039 who are a big part of Indian Prime Minister Mody's 0:01:32.080 --> 0:01:35.399 growth strategy for the country. So that leads us to 0:01:35.520 --> 0:01:41.000 a big, quite complicated question about that one policy. Who 0:01:41.080 --> 0:01:44.199 gains and who loses from President Trump putting a big 0:01:44.240 --> 0:01:48.120 price tag on skilled foreign talent working in the US. 0:01:50.240 --> 0:01:52.160 Of course, it's not just the H one B change. 0:01:52.160 --> 0:01:54.120 A few weeks ago we saw another example of a 0:01:54.160 --> 0:01:57.040 business getting caught in the crosshairs of an America first 0:01:57.080 --> 0:02:02.720 immigration policy with that ice raid a Hyundai plant in Georgia. 0:02:02.800 --> 0:02:05.920 So do expensive visas and raids like that one actively 0:02:06.040 --> 0:02:09.760 undermine the Trump administration's effort to attract foreign investment and 0:02:09.800 --> 0:02:11.480 in the end, could they actually be good news for 0:02:11.520 --> 0:02:15.880 countries and companies outside the US, including maybe India, who 0:02:15.960 --> 0:02:20.600 can offer those skilled workers an alternative home. Well, we 0:02:20.639 --> 0:02:22.919 have a lot of strands to unpit here and I'm 0:02:22.919 --> 0:02:25.680 delighted that we can talk about both sides of this 0:02:25.760 --> 0:02:29.919 policy today with Michael Deng geoeconomics technology analyst at Bloomberg 0:02:29.960 --> 0:02:34.320 Economics sitting in Washington today. And Chetna Kumar are geoeconomics 0:02:34.360 --> 0:02:37.200 analyst for South Asia who's joining us from New Delhi. 0:02:37.320 --> 0:02:39.240 And I should say, I'm sitting in New York and 0:02:39.280 --> 0:02:47.960 it's Tuesday morning, US time, But I think it's probably 0:02:48.080 --> 0:02:52.520 useful to start with some context on how important this 0:02:52.639 --> 0:02:56.280 visa has become for the US and indeed its relevance 0:02:56.320 --> 0:02:58.720 to India. So Michael just sort of talk us through 0:02:59.360 --> 0:03:02.280 the kind of companies that have relied on this visa 0:03:02.440 --> 0:03:05.720 and how important they are to America's tech industry. 0:03:06.480 --> 0:03:09.160 I think primarily most of the companies that have been 0:03:09.240 --> 0:03:11.520 using H one b's, I would say probably two thirds 0:03:11.560 --> 0:03:14.040 are the software and IT sectors. So you have the 0:03:14.040 --> 0:03:17.480 IT contracting and service companies Tata, Infosits, etc. But you 0:03:17.520 --> 0:03:20.360 also have Big Tech to a significant degree, relying on 0:03:20.400 --> 0:03:22.960 these H one b's to bring in software talent from overseas. 0:03:23.639 --> 0:03:26.280 These companies are going to be the ones most directly 0:03:26.360 --> 0:03:29.200 hit by this H one B fee change for IT 0:03:29.440 --> 0:03:31.480 services specifically, the impact is going to be greater just 0:03:31.480 --> 0:03:34.160 because it hits their business model directly. Big Tech in 0:03:34.200 --> 0:03:36.960 terms of software may be more capable of absorbing that hit. 0:03:37.400 --> 0:03:42.000 But outside of these directly computer related industries, there's also adjacent, 0:03:42.520 --> 0:03:46.760 smaller but also critical industries like semiconductors, for example, which 0:03:47.040 --> 0:03:49.560 don't necessarily need to bring in a huge bulk of 0:03:49.880 --> 0:03:52.560 foreign talent, but they do need to bring in a 0:03:52.640 --> 0:03:57.160 smaller group of highly specialized engineers to support their design, 0:03:57.240 --> 0:04:01.360 equipment and materials, manufacturing initiatives, etc. Which all kind of 0:04:01.360 --> 0:04:03.680 coincide with this huge restoring push that's going on in 0:04:03.680 --> 0:04:07.120 the US. So across the board, you're seeing software and 0:04:07.160 --> 0:04:10.920 it computer related occupations being hit hard first, but then 0:04:11.000 --> 0:04:14.520 a lot of other more niche industries that need foreign 0:04:14.560 --> 0:04:17.840 talent to support their own growth into the future also 0:04:17.920 --> 0:04:18.599 being impacted. 0:04:19.760 --> 0:04:23.640 The broad response that the administration might have, and I've 0:04:23.640 --> 0:04:26.200 heard even in the last few days, is these are 0:04:26.279 --> 0:04:31.400 easy ways for US tech companies to bring in cheaper 0:04:31.880 --> 0:04:37.240 foreign workers rather than pay American skilled workers, and it's 0:04:37.360 --> 0:04:40.480 undercutting American skilled workers, and that's what they're trying to 0:04:40.520 --> 0:04:42.839 prevent with this by putting this one hundred thousand dollars 0:04:42.920 --> 0:04:44.280 wedge in there. 0:04:44.960 --> 0:04:47.680 I do think that's true to some degree. We've started 0:04:47.720 --> 0:04:51.679 to see the market for especially junior entry level computer 0:04:51.720 --> 0:04:55.520 science software developers get a little soft. Recently, the stat 0:04:55.600 --> 0:04:58.400 for recent graduates who are majoring in computer science and 0:04:58.400 --> 0:05:00.359 the unemployment rate is around six percent, as one of 0:05:00.360 --> 0:05:03.599 the highest in the US currently. So I think specifically 0:05:03.640 --> 0:05:06.279 for that segment and this computer industry that this H 0:05:06.320 --> 0:05:09.960 one B policy is targeting, it is true to an extent. 0:05:10.040 --> 0:05:12.880 I think this could help that segment specifically. The fear 0:05:12.960 --> 0:05:15.760 is that this kind of blunt change also pulls in 0:05:16.040 --> 0:05:18.160 a lot of the other strategic industries that don't rely 0:05:18.200 --> 0:05:20.840 on this model of labor to support their workforce, and 0:05:20.960 --> 0:05:23.839 that they need the more highly specialized workforce that the 0:05:23.920 --> 0:05:26.839 H ANDEB is supposed to fulfill, and one hundred thousand 0:05:26.960 --> 0:05:29.839 is quite a big barrier in many cases they do 0:05:29.920 --> 0:05:32.920 require specialized talent, but that fee may be too big 0:05:32.960 --> 0:05:34.919 of a barrier in terms of bringing in foreign talent, 0:05:35.000 --> 0:05:37.920 and you could inadvertently harm US tech ambitions in the 0:05:37.960 --> 0:05:38.719 long run as well. 0:05:39.040 --> 0:05:41.400 I was struct that Read Hastings, the co founder of 0:05:41.480 --> 0:05:44.440 Netflix and certainly no great supporter of Donald Trump. He's 0:05:44.440 --> 0:05:46.719 been a sort of prominent back of the Democrats in 0:05:46.760 --> 0:05:49.040 recent years. He came out saying he thought this was 0:05:49.080 --> 0:05:51.720 a good idea this hundred thousand dollar fee for some 0:05:51.760 --> 0:05:54.640 of the reasons that you just suggested. But we can 0:05:54.680 --> 0:05:58.000 get into whether there might be exemptions and whether there's 0:05:58.040 --> 0:06:00.400 a way in which this could be more targeted in 0:06:00.440 --> 0:06:02.799 a second. But I wanted to get to you because 0:06:03.160 --> 0:06:05.479 my impression from reading some of the coverage was that 0:06:05.520 --> 0:06:07.960 there was really a lot of concern around this over 0:06:08.000 --> 0:06:10.920 the weekend, and it's still raising questions about a big 0:06:11.000 --> 0:06:12.280 chunk of Indian industry. 0:06:13.960 --> 0:06:17.560 That's right, Stephanie. The one hundred thousand dollars fee impacts 0:06:17.600 --> 0:06:21.559 primarily Indian tech workers and Indian tech companies in the US, 0:06:22.040 --> 0:06:23.800 because we know seventy percent of the H and B 0:06:23.920 --> 0:06:26.839 talent comes from India, but traditionally it was Indian tech 0:06:26.880 --> 0:06:30.080 companies the Data Cognizant emphasis which have been the greatest 0:06:30.080 --> 0:06:33.000 beneficiaries of the H and D program, and their business 0:06:33.040 --> 0:06:35.839 model relies on being able to hire these Indian tech 0:06:35.880 --> 0:06:38.279 workers and bringing them to the US to service on 0:06:38.480 --> 0:06:42.159 site contracts. So not being able to hire modified workforce 0:06:42.240 --> 0:06:44.640 is going to dent their pricing how they're able to 0:06:44.640 --> 0:06:47.719 offer services, and we've seen some of that impact show 0:06:47.800 --> 0:06:50.120 up in Indian stock prices and ID stock prices over 0:06:50.160 --> 0:06:52.520 the weekend and over this week particularly because of that. 0:06:53.040 --> 0:06:56.200 I think the second concern is broader about US and 0:06:56.240 --> 0:06:58.720 your relations and what this means for the broader trajectory 0:06:58.720 --> 0:07:00.480 of the relationship. I think we can and ignore the 0:07:00.520 --> 0:07:04.000 context within which this is happening. Tariffs on India have 0:07:04.040 --> 0:07:06.520 been doubled to fifty percent. There have been some other 0:07:06.600 --> 0:07:10.840 moves by the US administration attacking India, including provoking exemption 0:07:10.920 --> 0:07:13.680 leavers for India's investments in the Iranian pot of Chapahar 0:07:13.760 --> 0:07:16.560 and others, which make it seem like President Trump is 0:07:16.600 --> 0:07:18.600 tightening the squeeze on India. 0:07:18.400 --> 0:07:18.880 Quite a bit. 0:07:19.160 --> 0:07:22.240 There was a notion that perhaps India could withstand the 0:07:22.280 --> 0:07:25.160 fifty percent tariffs and a whole firm because it wasn't 0:07:25.200 --> 0:07:28.000 really a goods manufacturing goods exporting countries. 0:07:28.400 --> 0:07:31.680 But targeting services is really the engine of India's economy. 0:07:31.920 --> 0:07:36.160 So for scale, India exports about two hundred billion dollars 0:07:36.160 --> 0:07:38.480 worth of ID services every year, and about one hundred 0:07:38.480 --> 0:07:41.480 billion of that goes to the US, So targeting H 0:07:41.560 --> 0:07:43.360 and B workers is sort of seen as a strike 0:07:43.520 --> 0:07:44.840 on that entire industry. 0:07:45.280 --> 0:07:47.680 You know, when people think of Indian outsourcing we think 0:07:47.760 --> 0:07:51.360 of inevitably, we think of call centers. I know they've 0:07:51.400 --> 0:07:53.720 developed a lot since the early days of call centers, 0:07:53.720 --> 0:07:56.600 and there's lots of other services that these companies are providing. 0:07:56.800 --> 0:08:00.520 But this particular policies, if it's about people all coming 0:08:00.560 --> 0:08:02.760 to the States, why are they affected. You're just talking 0:08:02.800 --> 0:08:05.520 about the people who are helping coordinate on the ground 0:08:05.560 --> 0:08:06.440 in the US. 0:08:07.520 --> 0:08:11.760 So that's about three hundred thousand Indian H ONEB workers 0:08:11.800 --> 0:08:14.760 in the US currently, and that's about a tenth of 0:08:14.880 --> 0:08:16.400 the total Indian diaspora. 0:08:16.640 --> 0:08:20.320 That's a tenth of the diaspora in America. 0:08:20.400 --> 0:08:21.800 In the US, that's right. 0:08:21.960 --> 0:08:25.320 These Indian companies have relied initially because of the cost 0:08:25.480 --> 0:08:28.600 arbitrage of being able to hire Indian workers and bring 0:08:28.600 --> 0:08:31.640 them to the US. But there's also some advantages culturally 0:08:31.680 --> 0:08:34.160 and being able to efficiencies to being able to bring 0:08:34.200 --> 0:08:37.040 workers from India to service. A lot of the consulting 0:08:37.040 --> 0:08:39.800 and it contracts on site, and many of these contracts 0:08:39.840 --> 0:08:43.000 do require the service provider to be on site. And 0:08:43.040 --> 0:08:45.319 that's why you see the surge of sort of Indian 0:08:45.360 --> 0:08:47.800 workers in the US. It's not as much of a 0:08:47.880 --> 0:08:51.160 rude shock as it seems because Indian companies have been 0:08:51.200 --> 0:08:54.040 preparing and have been expecting the change of policy. Now 0:08:54.120 --> 0:08:57.720 for a while, President Trump did try to ban the 0:08:57.840 --> 0:08:59.800 H one D program in its first administration. 0:09:00.000 --> 0:09:01.040 I was not successful. 0:09:01.400 --> 0:09:03.199 But since then, of the last ten years, we've sort 0:09:03.200 --> 0:09:06.160 of seen Indian companies actually scale back their alliance on 0:09:06.280 --> 0:09:08.760 H one D visas for workers in the US. They're 0:09:08.760 --> 0:09:10.960 about thirty percent of the last decade, which is a 0:09:11.000 --> 0:09:13.880 sizeable reduction. And at the same time, we've seen actually 0:09:13.960 --> 0:09:17.439 US tech companies rely more on the Indian workforce in 0:09:17.440 --> 0:09:20.840 Indian deck workers like the Meta, Google, Netflix, et cetera, 0:09:20.840 --> 0:09:23.160 to sort of bridge their own skills gaps. So we've 0:09:23.200 --> 0:09:24.679 seen a little bit of the shift happened in the 0:09:24.760 --> 0:09:27.520 last ten years of US companies increasing their alliance on 0:09:27.559 --> 0:09:27.960 EAH one. 0:09:27.920 --> 0:09:31.520 D's Okay, now, Michael, given that a lot of things 0:09:31.559 --> 0:09:34.880 that come out of the administration, shall we say, don't 0:09:34.920 --> 0:09:38.080 turn out to be kind of hard and fast, is 0:09:38.120 --> 0:09:40.480 there a perception that there could be quite a lot 0:09:40.480 --> 0:09:42.240 of holes in this Do you see that as being 0:09:42.240 --> 0:09:44.840 the first reaction of US companies to just see if 0:09:44.840 --> 0:09:46.960 they can get an exemption. We've certainly seen a lot 0:09:47.000 --> 0:09:49.720 of companies looking for exemptions in tariffs, for example. 0:09:50.160 --> 0:09:54.280 Yes, I think in the absence of clear criteria and timelines, 0:09:54.320 --> 0:09:56.520 the first instinct for a lot of companies, I would argue, 0:09:56.520 --> 0:09:59.160 with the exception of maybe the IT consulting services companies 0:09:59.160 --> 0:10:03.120 because they were cifically targeted in the proclamation. But any 0:10:03.160 --> 0:10:07.080 other company like tangentially tech Related, STEM related is certainly 0:10:07.080 --> 0:10:10.360 going to press for an exemption first because that circumvents 0:10:10.400 --> 0:10:12.840 the entire issue for them, and I think in critical 0:10:12.840 --> 0:10:17.280 strategic industries like semiconductors, AI infrastructure, that's probably not going 0:10:17.320 --> 0:10:19.360 to be an issue for them. The key is whether 0:10:19.400 --> 0:10:23.520 this administration, at least in these critical technology ecosystems, understands 0:10:23.520 --> 0:10:26.400 the full scope of industries and companies that would need 0:10:26.440 --> 0:10:29.400 to be exempted, and do the understand all the labor 0:10:29.480 --> 0:10:32.400 dynamics and the workforce shortages that affect all the supporting 0:10:32.400 --> 0:10:35.760 industries that aren't just the headline flagship firms. Certainly, I 0:10:35.800 --> 0:10:37.679 don't think they're going to miss like an Nvidia or 0:10:37.679 --> 0:10:41.880 an open AI for example, But a lot of smaller companies, suppliers, etc. 0:10:42.440 --> 0:10:45.680 Also face workforce issues, and this gets into another issue 0:10:45.679 --> 0:10:47.640 that's persisted over the past decade, and that many of 0:10:47.679 --> 0:10:52.480 these non software STEM industries have traditionally had trouble attracting 0:10:52.520 --> 0:10:55.840 domestic US graduates because they've all gone to software, and 0:10:55.920 --> 0:10:58.000 so that foreign talent pipeline has been the way that 0:10:58.040 --> 0:10:59.600 they've kept their workforce sufficient. 0:11:00.080 --> 0:11:01.640 And what kind of job would that be? 0:11:02.160 --> 0:11:05.640 So specialist engineers in terms of chip design, chip manufacturing, 0:11:05.640 --> 0:11:08.160 for example, I'm using semiconductors because I'm more familiar with 0:11:08.200 --> 0:11:08.720 the industry. 0:11:09.040 --> 0:11:11.880 Why would you not attract American workers into that sector. 0:11:11.920 --> 0:11:13.679 It seems like that would be just as attractive as 0:11:13.720 --> 0:11:16.280 some of the other sort of STEM sectors. 0:11:15.920 --> 0:11:18.680 Mainly because software is so much more attractive in terms 0:11:18.720 --> 0:11:21.920 of the lifestyle and the salaries. And so there's that 0:11:22.040 --> 0:11:24.400 gap there that was best filled for a while in 0:11:24.440 --> 0:11:27.439 many cases by foreign researchers and foreign graduates. And I 0:11:27.480 --> 0:11:30.720 think the stat even for semiconductor related fields is greater 0:11:30.760 --> 0:11:33.440 than fifty or sixty percent of researchers all come from 0:11:33.520 --> 0:11:36.319 outside of the US, and so cutting off that pipeline 0:11:36.360 --> 0:11:40.679 right now would be pretty harmful for US tech competitiveness 0:11:40.679 --> 0:11:43.280 in these leading industries that really reply on a smaller 0:11:43.320 --> 0:11:45.200 pool of specialized labor, and. 0:11:45.120 --> 0:11:47.640 Just as as obvious question. If there is such scarcity, 0:11:48.040 --> 0:11:50.400 can't they just pay the one hundred thousand dollars The 0:11:50.440 --> 0:11:53.480 assumption of the US this administration has been in quite 0:11:53.480 --> 0:11:55.560 a lot of areas that the rest of the world 0:11:55.600 --> 0:11:58.559 is willing to pay up for access to the US 0:11:58.559 --> 0:12:00.479 in whatever form. 0:12:00.840 --> 0:12:04.480 I do think for certain industries they probably are okay 0:12:04.520 --> 0:12:07.240 with paying it. Unfortunately, those industries also happen to be 0:12:07.400 --> 0:12:09.840 the flagship firms and industries that are probably most likely 0:12:09.880 --> 0:12:13.360 going to get an exemption, like big tech companies are 0:12:13.360 --> 0:12:14.960 not going to have that much of an issue paying 0:12:14.960 --> 0:12:17.079 one hundred thousand barrier if they really need the talent 0:12:17.080 --> 0:12:17.640 they require. 0:12:17.800 --> 0:12:19.760 But they could just go and have dinner with Donald 0:12:19.800 --> 0:12:21.360 Trump again and maybe sort it out. 0:12:21.520 --> 0:12:24.959 Yes, Yes, and same thing for the headlining semiconductor firms 0:12:24.960 --> 0:12:28.920 for example. But if you dive down more into semiconductor manufacturing, 0:12:29.080 --> 0:12:31.520 when we're trying to reshore US fabs at a time 0:12:31.559 --> 0:12:34.720 when there's already a pretty significant cost delta with Asia fabs, 0:12:35.120 --> 0:12:37.960 adding one hundred thousand dollars barriers to the sort of 0:12:38.280 --> 0:12:40.880 core engineers you need to ramp up capacity in US 0:12:40.920 --> 0:12:45.199 fabs is not very beneficial to reshoring and it's sort 0:12:45.240 --> 0:12:49.160 of this layer underneath, this middle core of engineering talent 0:12:49.200 --> 0:12:50.839 in the US is going to be most affected by 0:12:50.880 --> 0:12:51.400 this barrier. 0:12:51.640 --> 0:12:54.880 I love the phrase that the cost delta with Asia FABS, 0:12:54.920 --> 0:12:56.640 but I guess we should sort of spell out that's 0:12:56.679 --> 0:12:59.880 just the fact that Asian companies producing chips are cheaper 0:13:00.040 --> 0:13:03.600 and US ones. Yes, yes, yes, but we can stick 0:13:03.640 --> 0:13:05.880 with FABS. I mean, just sort of teasing out the 0:13:05.960 --> 0:13:09.680 implications of what Michael was saying. It suggests that in 0:13:09.720 --> 0:13:13.640 these kind of high tech areas where the US has 0:13:14.120 --> 0:13:18.160 kind of significant ambitions, it seems like either they'll pay 0:13:18.280 --> 0:13:21.240 the US companies to get this talent or they will 0:13:21.280 --> 0:13:26.120 get an exemption. And that leaves the IT services sector, which, 0:13:26.160 --> 0:13:30.080 as you've described, is something that has been very important 0:13:30.080 --> 0:13:33.040 to some of India's biggest companies in the last few years. 0:13:33.120 --> 0:13:35.640 So does this come down to more of a sort 0:13:35.679 --> 0:13:41.479 of underhand way to tax those Indian exports of services 0:13:41.520 --> 0:13:43.520 without saying upfront that that's what we're doing. 0:13:44.360 --> 0:13:47.560 Definitely is hard to see a what of motivating this administration, 0:13:47.800 --> 0:13:50.640 but it does seem like it's one of the ways 0:13:50.720 --> 0:13:53.880 to tipen the squeze on India. The fifty percentatus have 0:13:54.000 --> 0:13:57.560 not led to India keething on goods or stopping buying 0:13:57.600 --> 0:14:00.600 Russian oil. It's not let a big change. There's sort 0:14:00.600 --> 0:14:05.840 of policy and agricultural market access. So targeting India's IT services, 0:14:05.880 --> 0:14:08.440 it's best performing companies and bring a lot of revenue 0:14:08.880 --> 0:14:12.400 is possibly one way of President Trump indicating the US 0:14:12.440 --> 0:14:14.679 as pharm mow leverage over India than India has over 0:14:14.720 --> 0:14:17.920 the US. But what the impact of this is then, 0:14:17.960 --> 0:14:19.760 whether it will actually be your tax or not. I 0:14:19.760 --> 0:14:21.600 think it's going to play out over a long term, 0:14:21.640 --> 0:14:24.360 and I think immediately though, yes, there will be a 0:14:24.400 --> 0:14:27.080 margin squeeze for some of these Indian companies. They will 0:14:27.120 --> 0:14:29.920 have to shift and think rethink their business models and 0:14:30.200 --> 0:14:34.240 pricing strategies. There might actually be some structural advantages for India. 0:14:34.280 --> 0:14:37.520 India and President Trump actually might be doing India a 0:14:37.520 --> 0:14:40.680 good turn by sort of restricting H one B visas 0:14:40.680 --> 0:14:43.360 for these kinds of jobs and others. How So, to 0:14:43.400 --> 0:14:47.520 start with fewer H one B visas means there's opportunity 0:14:47.560 --> 0:14:49.600 for a lot of these investments to go back into 0:14:49.680 --> 0:14:53.320 jobs in India. We've seen over the last decade a 0:14:53.400 --> 0:14:56.840 boom in global capability centers, which is the newer kind 0:14:56.840 --> 0:14:59.200 of outsourcing that you were speaking to. These are not 0:14:59.240 --> 0:15:02.600 the BPOs of the nineteen nineties. They are more advanced 0:15:02.600 --> 0:15:06.440 captive centers that everybody from US banks like JP Morgan 0:15:07.320 --> 0:15:11.960 in Goldman Sachs to US companies and chip design companies 0:15:12.080 --> 0:15:14.640 have built and used in India and they provide everything 0:15:14.680 --> 0:15:19.520 from advanced chip designing, engineering, data analysis, and even product development. 0:15:20.160 --> 0:15:23.040 So what started as cost arbitrage in India sort of 0:15:23.080 --> 0:15:26.920 turning into value and innovation in India. And there's an 0:15:26.960 --> 0:15:29.960 expectation that because H and B pisas are going to 0:15:29.960 --> 0:15:33.080 become cost there, some of these jobs might find their 0:15:33.120 --> 0:15:36.840 way back to India and contribute to this booming GCC economy. 0:15:36.880 --> 0:15:51.480 There one observation that's been made about China over the years, 0:15:51.520 --> 0:15:55.080 and particularly in response to the first Trump term and 0:15:55.120 --> 0:15:59.080 the trade war with China then, was that the initial 0:15:59.120 --> 0:16:04.480 punishment also inspires a policy reaction within China. We've seen 0:16:04.960 --> 0:16:08.280 where there's a sort of greater determination to reduce reliance 0:16:08.320 --> 0:16:11.880 on the US, and now as we've come into the 0:16:11.920 --> 0:16:15.280 second Trump term, we've seen various ways in which China 0:16:15.320 --> 0:16:18.200 has kind of long prepared for this moment and has 0:16:18.400 --> 0:16:22.680 has ways of mitigating the effects of the very high tariffs. 0:16:23.000 --> 0:16:25.440 You know, wouldn't we say the same thing about India? 0:16:25.560 --> 0:16:27.880 And that's somewhat embedded in what you just said. But 0:16:28.040 --> 0:16:30.880 is there not a slightly different Moody growth strategy that 0:16:30.960 --> 0:16:33.160 comes out of this that is actually less beholden to 0:16:33.200 --> 0:16:33.680 the US. 0:16:34.520 --> 0:16:37.120 Possibly, And I think we're already seeing some of the 0:16:37.160 --> 0:16:40.160 signals that the Prime Minister is sending about improving india 0:16:40.200 --> 0:16:43.160 self alliance or people, or the government is seeing about 0:16:43.160 --> 0:16:45.680 wanting to support people who are losing h mend jobs 0:16:45.680 --> 0:16:47.880 coming back to India. But I do want to say 0:16:48.080 --> 0:16:49.760 the case with India is a little bit different than 0:16:49.840 --> 0:16:54.000 China in the sense that India's technology capabilities and India's 0:16:54.000 --> 0:16:57.840 tech industry is so complementary and deeply linked with the US. 0:16:58.080 --> 0:17:01.440 They're trying to unravel this relationship back hurts both for 0:17:01.520 --> 0:17:04.120 a considerable period of time. Yes, India is a big 0:17:04.200 --> 0:17:06.600 value exporter to the US, but not a big market 0:17:06.640 --> 0:17:09.359 for US firms. It's a big sort of place of 0:17:09.400 --> 0:17:13.840 operations for US companies, So I think unraveling this relationship 0:17:13.920 --> 0:17:16.040 is harder. And I think service is a little bit 0:17:16.080 --> 0:17:18.399 trickier than goods in terms of trying to replace and 0:17:18.440 --> 0:17:21.680 build talent pools and supply chains so quickly. Yes, and no, 0:17:21.800 --> 0:17:23.440 I think there's going to be a different growth strategy. 0:17:23.440 --> 0:17:26.840 And yes, India's exports are somewhat diversified, its services industries 0:17:26.840 --> 0:17:30.120 a lot more maturity. Its talent is wanted in other 0:17:30.119 --> 0:17:32.200 parts of the world, and there might be some sort 0:17:32.240 --> 0:17:34.840 of urgency in other countries trying to tap up Indian talent. 0:17:35.000 --> 0:17:37.400 But I think in the long run, there's enough drivers 0:17:37.400 --> 0:17:40.680 and complementalees between these two industries, and these two countries 0:17:40.800 --> 0:17:43.040 trying to break away may not be beneficial to either. 0:17:44.000 --> 0:17:46.200 Michael, I guess just pulling out on that very quickly. 0:17:46.320 --> 0:17:48.280 Apart from that longer term point, I mean, will other 0:17:48.280 --> 0:17:49.800 countries just take advantage of this? 0:17:50.200 --> 0:17:52.920 I think to a small degree, yes, And like we've 0:17:52.960 --> 0:17:57.280 seen small signals of the UK, Germany, Canada, for example, 0:17:57.359 --> 0:18:01.600 where skilled worker immigration isn't quite as let's say, arbitrary 0:18:01.680 --> 0:18:04.439 or difficult as the US that there's some science that 0:18:04.520 --> 0:18:06.880 small quantities may go there, But the US is really 0:18:06.880 --> 0:18:10.679 the core of this global tech talent migration. And whatever 0:18:10.720 --> 0:18:13.280 happens on the H one B side moving forward, how 0:18:13.280 --> 0:18:16.200 they decide the exemptions, what industries they work with or 0:18:16.280 --> 0:18:19.159 what industries they don't really will shape the flow of 0:18:19.160 --> 0:18:19.840 global talent. 0:18:20.240 --> 0:18:22.280 But I guess for those countries who worry about the 0:18:22.280 --> 0:18:25.119 brain drain of their most skilled talent, I heard Canadian 0:18:25.160 --> 0:18:27.440 Prime Minister Mark Carney talk about this earlier this week, 0:18:27.480 --> 0:18:30.600 that they have a large number of very highly trained 0:18:30.760 --> 0:18:34.159 people in advanced STEM courses in Canada and then a 0:18:34.160 --> 0:18:36.359 big chunk of them go to the US. It's going 0:18:36.440 --> 0:18:37.920 to be easier for these countries to hold on to 0:18:38.000 --> 0:18:38.800 their skilled talent. 0:18:39.359 --> 0:18:41.360 Yes, But I would say the reason for a lot 0:18:41.359 --> 0:18:43.879 of this brain drain is just the much higher compensation 0:18:43.920 --> 0:18:45.959 and benefits in the US in the first place, And 0:18:46.040 --> 0:18:49.360 so that doesn't fully go away even with this fee 0:18:49.400 --> 0:18:51.520 in place. If they're still hiring roughly the same amount 0:18:51.520 --> 0:18:54.040 of H one b's per year, it maybe shift in 0:18:54.119 --> 0:18:56.439 terms of the industry that they hire through, right, and 0:18:56.480 --> 0:18:59.119 so in terms of the overall quantity. If this H 0:18:59.160 --> 0:19:02.880 one B is properly executed, I don't see a huge 0:19:02.880 --> 0:19:05.320 shift happening to other countries, just in terms of the 0:19:05.320 --> 0:19:07.160 reasons why they come to the US in the first. 0:19:06.920 --> 0:19:09.920 Place, Okay, and just on the sort of longer term 0:19:10.000 --> 0:19:12.600 question and we faced this issue also in the sort 0:19:12.640 --> 0:19:16.680 of Bidenomics era, that there was a great desire in 0:19:16.720 --> 0:19:20.639 the administration for speed in building up US domestic industries 0:19:20.640 --> 0:19:24.800 in certain sectors, semiconductors being one, but also a big 0:19:24.840 --> 0:19:26.960 desire to have it all be home grown and be 0:19:27.359 --> 0:19:32.800 aware a vehicle for upgrading US born talent. And there's 0:19:32.800 --> 0:19:36.119 clearly a tension between those things. If you want to 0:19:36.160 --> 0:19:38.320 have it all the US workers, as one person said 0:19:38.320 --> 0:19:39.800 to me, well we could do that in five years. 0:19:39.840 --> 0:19:41.280 If you want to do it in one or two years, 0:19:41.280 --> 0:19:42.880 then there's going to be a lot of people will 0:19:42.920 --> 0:19:46.119 be bringing in from overseas. Has that tension increased in 0:19:46.160 --> 0:19:47.960 the second Trump administration. 0:19:48.880 --> 0:19:52.960 Yes, So above all else, what the domestic semiconductor and 0:19:53.040 --> 0:19:56.520 wider tech ecosystem needs is time to build up these 0:19:56.720 --> 0:19:59.320 workforce programs to get graduates and employees into the right 0:19:59.359 --> 0:20:03.439 industries firms. The Trump administration nominally has promised a lot 0:20:03.480 --> 0:20:06.880 of support for workforce issues, but some of their actions 0:20:06.920 --> 0:20:10.119 had a chilling effect on supporting these industries properly, the 0:20:10.200 --> 0:20:12.359 Kanda Ice Reid being one example, just in terms of 0:20:12.640 --> 0:20:15.200 making sure foreign talent can come in as a transition 0:20:15.680 --> 0:20:19.080 to patch that pipeline and tel domestic talent can come online. 0:20:19.280 --> 0:20:22.080 For the semiconductor space, specifically, what happened with what's known 0:20:22.119 --> 0:20:26.280 as GNATCAST or the NSTC, which was responsible for administering 0:20:26.640 --> 0:20:29.359 roughly seven to eight billion dollars in semi conductor research 0:20:29.359 --> 0:20:33.000