While IT issues were hardly a major focus of the 2016 presidential election, the election of Donald Trump to be president of the United States has some interesting implications for IT services providers.
Trump has said little about technology issues, but he has said that he wants to allow unlimited first-year expensing on all capital equipment. These days, the single biggest portion of the capital budget inside most organizations is still IT. Add in all the other tax cuts being proposed, and it becomes apparent there would, in theory, be more dollars available to upgrade IT infrastructure, assuming there is no downturn in the overall global economy.
Of course, in the age of the cloud more IT is being treated as an operating expense than ever. But, there are still hundreds of thousands of applications out there running on aging IT infrastructure.
Potential opportunities and challenges ahead
As arguably the first president elected by social media, Trump is at least cognizant of the potential power of IT. He has also pledged to cut government spending, which in turn may spur more process engineering inside the government as necessity becomes the mother of invention. For IT service providers that have expertise in digital business process transformation, that could lead to new opportunities.
Immigration issues, however, are likely to come to a head in a way that doesn’t benefit IT service providers. Many IT service providers recruit talent on a global basis, and moving technology workers to the U.S. is only going to become more problematic. Trump has said he is generally for allowing highly skilled workers to come to the U.S., but he has also pledged to dismantle the controversial H-B1 visa program that many IT companies rely on to bring IT professionals into the United States. As a result, IT service providers will need to invest more in developing their own homegrown talent.
Trump’s positions on IT issues
The Information Technology and Innovation Foundation (ITIF) issued a report this week outlining what is known about Trump’s positions on IT issues. The report suggests that a Trump administration will be keen to increase investments in cybersecurity. On the other side of the ledger, IT services firms that have invested heavily in compliance practices may be challenged as a Trump administration moves to eliminate or possibly not enforce many regulations and potentially even create new ones.
On other technology-related issues such as Net Neutrality, the president-elect appears to be in favor of the idea, but he clearly sides with those that want to force IT companies to unlock encryption anytime the government obtains a warrant.
Naturally, it will take some time for all these IT issues to be addressed given the size and scope of the Trump administration agenda. Most IT service providers tend to avoid getting caught up in politics for fear of alienating one type of potential customer over another. But now that the election has been decided, IT service providers need to look to their own business models. Government policies can have both direct and indirect impacts on demand for IT services. The goal for IT services providers in the days ahead is to pay close attention to not what is being said, but rather what is being done as new administration prepares to do battle with all manner of Washington gridlock.