KOCHI: While Donald Trump’s rallying cry ‘Buy America, hire America’ is sending shivers down the spine of many firms with big US exposure, Kerala begs to differ. Three state firms having their business fortunes tied to the US - kidswear firm Kitex, IBS Software and online tutoring firm Growing Stars - are not losing any sleep over Trump.
At the Kitex Garments factory in Kizhakkambalam on the outskirts of Kochi, over 9,000 employees are going about their task as usual. For starters, Kitex Garments is the world’s third largest infant wear supplier with 100 per cent exports to the US. The company’s boss Sabu Jacob said Trump would not allow the cost of living of young Americans to go up.
“I sell my products to US clients at prices as low as 70 cents to 2 dollars (`47-`137 per product). The labour component is even lower at 10 cents (about `6.72) per product,” he said. “It’s practically impossible to replicate this model in the US. If Trump imposes any import tax that will increase the cost of the products, which will be unpopular.
I don’t think he’ll do that,” he said. Sabu reckoned the next four years to be “golden years” for India as “Trump is a business- minded person.” Kitex’s clients include US brands such as Gerber, Toys R Us, Jockey, Mothercare and Carter’s.
Will automation in the garment industry lower the cost for US firms? “I employ the world’s best technology and we ship three containers per day to the US. We are present in 28,000 stores across the US. I don’t think anybody can match us at the scale and cost at which we operate,” he said. V K Mathews, founder of IBS Software, said an IT products company like IBS will not be hit by the Trump administration’s move to overhaul the H1B visa rule.
“We are an IT products firm, involved in innovation and new products development, hence less affected by the proposed changes in H1B visa rule,” he said.
IBS has a significant presence in the US after it acquired three American firms - Discovery Travel System, Washington (2005), Boston-based VISaer (2008) and Atlanta-based Hotel Booking Solutions (2012). “At all these locations, we predominantly have local people working for us,” Mathews said.
IT services companies led by the big three - TCS, Infosys and Wipro - will be hit if a Bill tabled in the US to hike the minimum mandatory annual salaries paid by the companies from $60,000 to $130,000.
“In the short-term, this will affect IT services companies. But in the long-term, I hope better economic sense prevails,” said Mathews.
Some other firms too felt that their business model will be hard to recreate in the US. Kochi-based online tutoring firm Growing Stars, which has most of its senior executives sitting in the US, is one among them.
The firm hires people with teaching degrees and deep knowledge in a subject and trains them to polish their accents so that American students can understand.
These teachers coach students, mostly math - from algebra and trigonometry (middle/high school) to C++ programming (IT courses). An officer at the Growing Stars said the online tutoring company would not be impacted by the Trump restrictions.
“The teachers we train tutor the American students from their homes. Ours is not a business-to-business model and hence will not be affected,” he said. “While it would cost $60 for a student to train under a tutor in the US, under Growing Stars’ the cost is as low as $15 and more effective as it’s one student per tutor,” he said.