When Geopolitics Meets Algorithms: The HIRE Bill and the Reckoning for Indian IT

There is something disquieting about watching a comfortable model unravel slowly, not because of a single shock but because several forces conspire to show you that the foundation was never as deep as it felt. The HIRE Bill — a private member’s proposal in the US that would levy a 25% tariff on work sent abroad — is unlikely, on its own, to become law. But its appearance on the public stage is a clarifying moment: a signal that the tidy assumptions that propelled Indian IT for decades are under strain HIRE Bill shakes up IT players.

I read that piece and felt what many of us in the industry feel: not panic so much as a sober awareness that we are being asked to evolve — quickly and often at scale.

The old contract: volume, scale, and cheap juniors

For twenty years Indian software services prospered by combining low-cost labor with relentless operational discipline. It was simple in an almost brutal way: move routine work to lower-cost locations, scale teams, and profit from the differential. Companies like TCS, Infosys and Wipro anchored themselves in that model, with large portions of revenue tied to North American contracts. The HIRE Bill shines a political spotlight on that reality and the vulnerability it creates HIRE Bill shakes up IT players.

But there is a deeper, quieter reshaping already at work: AI.

AI is not a cost center — it’s a redefinition of the work itself

AI does what machines have always done: it automates repetition. But modern models do more: they can synthesize, generate, and in some cases make decisions that used to require junior hands and the first rungs of traditional delivery pyramids. The consequence is obvious and immutable: the “cheap-juniors-at-scale” engine falters when junior work is automated away.

Pareekh Jain’s observations, cited in the BusinessLine piece and in his posts, capture this tension well: the industry’s margin engine is eroding because the role that sustained it is being replaced by models and automation [HIRE Bill shakes up IT players](https://www.thehindubusinessline.com/opinion/hire-bill-shakes-up-it-players/article70030726.ece; https://www.linkedin.com/posts/pareekhjain_hire-bill-shakes-up-indian-it-players-activity-7371405002218811392-x0Qb).

What this means — not tomorrow, but starting now

The right question is not whether the HIRE Bill will pass. The right question is how the structural pressures it symbolizes — geopolitical resistance to offshoring and technological substitution by AI — will reshape strategy.

At a high level, the industry must pursue three linked bets:

• Invest in AI and the people who can operate AI rather than merely be displaced by it. This means platform engineering, model ops, data privacy and security expertise, and product-thinking people who can convert ML capabilities into business outcomes.
• Diversify markets beyond the US. Europe, Southeast Asia, Africa and parts of Latin America are imperfect but important hedges. They are also growing markets for digital transformation, and pursuing them thoughtfully will reduce single-market concentration risk.
• Move up the value chain. Replace sheer scale with depth: complex systems engineering, IP-led products, industry-specific platforms and outcome-based contracts command better margins and are harder to commoditise.

Each of these moves costs money and time. They also require a cultural shift — from staffing ratios and utilization targets to talent ecosystems, higher salaries, and risk-tolerant investment in R&D.

The tension of raising prices and preserving competitiveness

One uncomfortable truth: if Indian firms compensate for lost junior-headcount economics by simply raising prices, they risk losing the very competitive advantage that enabled their global scale. On the other hand, if they don’t raise prices and instead squeeze margins into oblivion, they hollow out balance sheets and strategic flexibility. The middle path requires creating differentiated value so higher price points are credible.

A likely near-term landscape: consolidation and differentiation

I believe the transition will favor those who can combine three capabilities: capital to invest in AI and platforms, talent to build higher-order services, and the commercial courage to shift toward outcome-based engagements. That combination will likely produce consolidation — not because smaller firms are weak, but because scale matters in funding R&D, buying talent, and building IP.

At the same time, I don’t imagine Indian IT disappearing from global supply chains. It will transform. The country has deep engineering depth, entrepreneurial energy, and an ecosystem that has adapted repeatedly to change. We have seen it before; this time the change will be mediated by models, data, and geopolitics.

A reflective note on responsibility

There’s a human story in this industrial shift. Millions of careers, institutions and cities were built on the old model. The ethical imperative for leaders is to make the transition with empathy: invest in reskilling, build educational pipelines aligned to AI-era work, and design social safety nets where possible. If technology is the vector of disruption, compassion should be its overlay.

The HIRE Bill is a wake-up call — but not the cause. AI, geopolitics and market concentration were already nudging us toward the same conclusion: the old arbitrage-based playbook has an expiry date. What follows will be harder, more sophisticated, and — if we do it right — more sustainable.

In the end, resilience is rarely heroic. It is patient, iterative, pragmatic change. The industry has remade itself before; I am convinced it can do so again. The form it takes will matter — for balance sheets, for national competitiveness, and most of all for people whose livelihoods are tied up in this great experiment of our times HIRE Bill shakes up IT players.

---

Regards,
Hemen Parekh