First, the restriction on imports allowed them to raise prices and margins dramatically - by nearly $3,000 per car in 1984 alone;
Second, the limit encouraged the likes of Toyota and Honda to move upscale and sell higher quality and more expensive cars, since they could no longer sell as many small cheap cars as they wished;
Third, since price-based competition was no longer viable, the Japanese moved to differentiation and started marketing their advantages of better quality and fuel-efficiency, and introducing new brands, such as Lexus and Acura;
Finally, it forced them to localise manufacturing in the US, and they soon created ultra-efficient new factories in Tennesee, Kentucky and South Carolina that de-risked them against currency fluctuations; and today has given them a low-cost production base - sometimes more efficient than even Japan.
Looking back, the voluntary restraint agreement was the critical catalyst that enabled Japanese car companies to transform themselves from manufacturers of cheap and cheerful econoboxes to truly global firms - fully competitive against the best in the world, including the Germans.
In a similar way, the Border Security, Economic Opportunity, and Immigration Modernisation Bill of 2013 - introduced three weeks ago by a bipartisan group of eight US senators - might well turn out to be a blessing in disguise for Indian outsourcing companies. The Bill, which seeks to increase the number of visas that the US government can grant highly-skilled workers (aka H1-B visas), from 65,000 to 110,000 a year, is likely to constrain non-American companies operating in the US. Since the new law will force employers to attest that they tried to recruit US citizens before offering the job to foreigners, the US Labour Department can scrutinise hiring decisions, creating uncertainty, opening the floodgates to litigation, and paradoxically, making it harder and costlier to fill specific jobs. How that will help the US economy become more competitive is anybody's guess, but these legal changes could be just the catalyst for India's information technology (IT) companies to transform themselves.
For several years now, industry observers have pointed to the need for these companies to change the business model that has served them so well. The largest of these firms, such as Tata Consultancy Services, Cognizant and Infosys, are successful and profitable behemoths that, in a good year, might hire 30,000 to 40,000 people. However, they have to evolve their business model quickly. Hiring and managing such large numbers of people are getting exponentially harder. Commoditisation and fierce price-based competition has set in. Governments all over the world, concerned about job creation, data security and privacy, are increasingly challenging the offshoring model. In light of these challenges, the Indian technology giants clearly need to reinvent themselves. They need to connect more with business decision-makers, not just the IT department of their clients. They need to be more consultative and provide more business solutions with pricing that is linked more strongly to outcomes. They need to truly globalise so that they look and feel like an American company in America, and like a German company in Germany.
Obvious as these changes may be from the outside, there is nothing like a crisis to provoke large successful companies to move decisively. The proposed revisions to the immigration rules in the US may finally provide just the impetus for change. Of course, there will be short-term pain and higher costs, but those firms that see the new immigration rules more as an opportunity than a threat and use this disruption to rapidly localise their workforce and their leadership in America; those that abandon cost arbitrage and pursue differentiation; those who turn their US operations into a second hub in their global network, will likely be richly rewarded.
Strict limits on the use of H1-B visas may be just the catalyst for Indian IT services companies to move up the value chain and shift from renting out intelligence quotient to creating valuable intellectual property and, in the process, becoming highly competitive firms that are no longer pejoratively seen as Indian "body shops", but as truly global technology companies.
The author is the former chairman of Microsoft India and Cummins India, and a member of the Infosys board. He is the author of Conquering the Chaos: Win In India, Win Everywhere (forthcoming from HBR Press). These views are personal. A version of this appeared in HBR.org