Wipro sees Trump regulations threat to growth

Wipro, India’s third-largest IT services company, has said the developments stemming from recent US Presidential election could have a material adverse effect on its business.

“Significant developments stemming from the recent US Presidential election could have a material adverse effect on our business,” Wipro said in its annual filing to the US Securities and Exchange Commission. This statement comes at a time when Indian IT services companies like TCS, HCL, Infosys and others are under the pressure of new US administration's protectionist measures.

“On November 8, 2016, Donald J Trump was elected the next president of the United States. As a candidate, President Trump and his administration expressed support for policies impacting existing trade agreements, like North America Free trade agreement (Nafta), and proposed trade agreements, and promoting greater restrictions on free trade generally and significant increases on tariffs on goods imported into the United States,” the company said in the SEC filing earlier this week.

The new US administration’s decision like restrictions on immigration with stricter visa norms and call for the creation of more jobs in the US along with repealing Affordable Care Act (ACA) have created ripple effects in Indian IT services majors.

“...The regulatory and legislative environment surrounding the healthcare industry is facing uncertainty due to the continuous lack of clarity surrounding the future of the ACA. Changes in existing regulations or increased governmental intervention in the industries, where our clients operate may adversely affect the growth of their respective businesses and therefore negatively impact our revenues,” said Wipro.

Trump administration signed an executive order this April that called for a review of the H-1B visa programme, saying they should never be used to replace American workers and must be given only to the most skilled and highest paid applicants.

“There are some legislative proposals which, if passed and signed into law, could add further costs and/or restrictions to some of the high-skilled temporary worker categories. In turn, this will increase our cost of doing business in the US further and that may discourage customers from seeking our services. This could have a material and adverse effect on our business, revenues and operating results,” Wipro stated.