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Summary

A Donald Trump presidency is an imminent reality, and as the shock of his unexpected win fades, IT services providers are left wondering what a Trump administration, and its potential anti-globalization and protectionist policies, will mean for their ability to execute on global delivery strategies. Realistically, it's too early for providers to take action until more clues and cues emerge as the new administration takes hold, but maintaining and optimizing their ability to move talent seamlessly across regions should be an immediate priority. Customers, meanwhile, who have leveraged global delivery for cost and talent efficiencies need to prepare for potential changes on both fronts.

Consequences on global service delivery and quality are top of mind, but undefined

A Trump candidacy, and now presidency, was defined in part by its anti-globalization message, even though how that would actually manifest itself remained mostly undefined throughout the campaign. Although it remains far too early to tell just what a Trump administration will bring, an anti-globalization position has the potential to bring massive disruption to IT services providers that depend on globally dispersed delivery models, and a range of regional talent in near- and offshore locations, to serve their clients. US enterprises will no doubt spend part of the immediate post-election period reviewing how and from where their services are delivered – whether infrastructure, applications, or business process outsourcing – and how new policies could impact current and future engagements.

All IT service providers, whether headquartered in the US or elsewhere, will be affected if more restrictive policies on trade and talent impose limits on where providers are able to source, hire, and train delivery personnel. This runs the risk of impacting service delivery quality for US customers. Providers differentiate themselves, in part, on their ability to access and leverage offshore talent wherever it's needed. A massive curtailing of H-1B visas, for example, will mean providers will need to make immediate shifts in what they're able to offer customers locally, unless or until they're able to compensate with talent. This situation could be especially pronounced for the India-based vendors, who have looked at the US for new and continued revenue growth opportunities using their offshore models as a core differentiator, and providers that have invested in Mexico, Central America, and South America to provide more nearshore capabilities to US-based clients. But all IT services providers, both US and non-US, rely heavily on global pools of talent to complement local skills and resources.

For providers, there's also the unanswered question of the impact on US government spending (including a potential repeal of Obamacare and subsequent consequences to providers' and payers' IT services). There's potential public sector impact not only at the federal level, but at the cascading county, state, and local levels, should there be any cutbacks or pullback on spending due to either a Trump administration or changes in state legislatures and governorships.

Appendix

Further reading

"NTT Data closes its acquisition of Dell Services," IT0019-003587 (November 2016)

"CenturyLink acquiring Level 3 to create stronger US player and larger global challenger," TE0005-000867 (November 2016)

Author

John Madden, Practice Leader, Large Enterprise Services

john.madden@ovum.com

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