H1B visa: Ticket to disaster?

Top Indian IT companies have been worrying about their projects in the US ever since Donald Trump won the Presidential election. The misuse of non-immigrant visa schemes has topped the Trump agenda since the early days of his campaign, the H1B visa program in particular.

This policy, which allows Indian IT companies like TCS, Wipro, and Infosys to send technical staff to their US projects—will be made stricter by the Trump administration, which could have a massive impact on their services abroad.

“Visa programs for foreign workers … should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritizes the protection of American workers—our forgotten working people—and the jobs they hold,” says an excerpt from the executive order on H1B visas signed by the Trump administration. With several Indian companies having set up offices in the U.S., hiring largely foreign employees, narrowing the scope of the visa is likely to have an impact on our IT industry.

The H1B visa, a foreign work visa, was established to help US companies recruit from abroad, in the absence of qualified local workers. However, this visa has been used to hire cheap labour from foreign countries so companies do not have to meet the stringent criteria that come with hiring locally.

The overhaul of the H1B visa comes close on the heels of a ban on refugees and travellers from seven predominantly Muslim countries. However, experts believe that it is not yet time to panic. “Let us wait and see. Trump has said he will prevent misuse. The leaked drafts do not indicate any drastic action,” said T.V.  Mohandas Pai, former HR Head, Infosys.

Several major companies have spoken out against the ban on people from seven countries. "This is not likely to affect us. Trump has banned visas to certain countries that have been accused of harbouring terrorists,”  Pai explained.

The H1B overhaul is more likely to have an impact on the IT industry, as over 50% of its recipients are Indians who have been hired to work in the technology departments of foreign companies and Indian businesses that offer services abroad.

“Our country’s immigration policies should be designed and implemented to serve, first and foremost, the US national interest," reads a copy of the proposal, which was published by media organisations on Monday.

Simply put, these foreign work visas were introduced so US companies could hire foreign employees in case they couldn't find qualified local recruits. However, it has been used to bring in cheaper labour from overseas, which the Trump administration says has led to a drastic rise in unemployment rates in the U.S.
Pai remains optimistic saying, “I believe that Trump's Presidency will prove beneficial to India as he has promised to eliminate terrorism. Also, his support for American oil and for fracking will mean lower oil prices over a longer term, which of course, works out very well for us! The situation with the IT industry, however, remains very fluid at the moment.”

Visa or employee mobility regimes should be equally applicable to all across the industry: Abidali Neemuchwala, CEO of Wipro
Addressing reporters at a press conference, while announcing his company’s Q3 revenue performance at the Wipro campus in Bengaluru, Mr. Neemuchwala said, “Wipro’s client investments in certain areas have not picked up the pace in 2016 because of the caution in the context of the US elections and Brexit.

In the current year we believe that the clarity will emerge and we expect an uptake in the client investment. The visa regime as well the other employee mobility regimes should be equally applicable to all the players across the industry. Wipro is working with Nasscom to ensure the same.

We are watchful of two specific areas: We have recently acquired the healthcare services and because of the regulatory changes around ACA (Affordable Care Act, which is also called Obamacare), we are waiting for clarity to emerge on that part of our business. We intend to continue hiring locally and invest in delivery centers and innovation centers, especially in the US.

We will work on reducing any kind of policy bottlenecks: Shivendra Singh VP and Head-Global Trade Development at NASSCOM
This is not the first time that the US administration’s policy has affected the Indian IT industry. Back in December 2015, the US government had levied supplemental visa fees on a few companies, which indirectly affected the IT industry in India, given the fact that a large number of IT companies in the country contribute to the US economy.

According to that policy, the companies had to pay an additional fee of $4000 per one H1-B visa and an additional fee of $4500 for an L1 visa. Subsequently we raised our concerns saying that it is altering the level-playing field because all the companies were not paying that amount. The government of India highlighted this issue at the World Trade Center (WTO) and the consultation is still going on regarding this.

We have been working with the US administration for over years, highlighting the contributions of the Indian IT industry to the US economy. We support local hiring and we have supported more than 411,000 jobs in the US. NASSCOM always makes sure to bridge any gap or loophole.

The laws that will be created in the US should have applicability to all or otherwise, some companies may bring in employees for low salaries, which can nullify the rationale that has been set forth for this whole purpose of losing our jobs to someone else.

However, I feel the fact that President Donald Trump spoke with our PM, implies that he treats India as a friend. India is a fastest growing economy in the world. We will be working on both sides to reduce any kind of policy bottlenecks to grow the business from bilateral trade. On a broad level, we have been constantly voicing the argument that skilled migration benefits global economy.  

‘Companies that pay the least will be impacted the most’
Mohandas Pai, industry veteran and chairman of Manipal Global
A foreign policy expert who did not wish to be named said that every country does what it wants to. We can’t object to what they do. There is an internal argument in the US. Tomorrow, H1-B visa might get abolished, Indians might not be able to go the US and work. It’s an argument within their country whether it’s right or wrong. Donald Trump is the elected president of the US and for the next four years, he will set the rules. If the court overturns it, it’s a different issue. Indian nationals are not restricted.

Trump was talking about a wholesale change in H1-B visa even in his campaign. The scope of the visa has been narrowed such that H1-B visa holders can no longer replace jobs of American workers, which only takes place through Knowledge Transfer (KT).

This comprises only about 10% of any new business. It is a very large part of what Indian IT companies do. In KT, people go on-site to better understand the technology and the kind of work is coming down, but this number has become very small. I don’t think it will have an actual impact on the industry. When they talk about displacement of jobs, the total number could well be over 4000 to 5000 in a year. Now this happens because companies adopt new kinds of technologies.

Moreover, Indian companies are very compliant and they undergo audit themselves. Today, 90% of work is project work, which means they continue to work on projects and maintain software. It’s a new work for them because it has not been done in America.    

Do you think it is not going to affect the Indian IT companies in a major way?
No. The companies that pay well will not be impacted even if trump raises wages. One or two companies that pay the least will most definitely be impacted. More than 50% of the visas are used by people who come back from the US within 9 months.

They keep travelling up and down and that’s a model. Overall unemployment rate in America is only 4.9%, which is the lowest in the past 10 years. The data is actually against what people are talking. People are taking anecdotal evidence and trying to blow it up