Proposed US H-1B Visa Policy May Hurt Indian IT

by CXOtoday News Desk    Aug 19, 2015


Immigration and visa issues in the US, a long-pending issue, could further hurt India’s $146 billion IT outsourcing industry in the coming months as the US heads towards Presidential elections in 2016.

The US is currently the biggest market for the Indian IT services sector. In recent years, the country’s IT outsourcing sector has been a beneficiary of the temporary US work visas that are required by skilled foreign workers to work in that country. The employees working at client locations in the US are issued H-1B visas, which have a cap of 65,000 a year. 

Read more: H1B Barriers Force Indian IT Cos To Hire Locally

The US Congress in recent months has been considering Bills that seek to triple the cap of H-1B visas to 195,000. There is, however, a growing discontent about the H-1B visa process among skilled workers in the US. 

Recently, the Republican presidential frontrunner Donald Trump has promised to put an end to H-1B visas and also proposed to raise the minimum wage for the preferred work visas for Indian technology professionals as he outlined his policy, which if passed can be harmful for IT companies in India having huge client base and offices in the US.

Trump’s states, “We graduate two times more Americans with STEM degrees [science, technology, engineering, mathematics] each year than find STEM jobs, yet as much as two-thirds of entry-level hiring for IT jobs is accomplished through the H-1B program. Such a move, he argued, would force companies to give IT jobs to unemployed Americans and not cheaper workers from overseas, including India.

The real-estate tycoon lashed out at Facebook founder Mark Zuckerberg and Florida senator Marco Rubio, who has introduced a bill to triple H-1B visas. Incidentally, Rubio is one of the Republican presidential candidates.

Releasing a position paper: “Increase prevailing wage for H-1Bs,” Trump campaigns came out in strong opposition to the Zuckerberg s move to increase the number of H-1B visas. He notes in the paper, “Raising the prevailing wage paid to H-1Bs will force companies to give these coveted entry-level jobs to the existing domestic pool of unemployed native and immigrant workers in the US, instead of flying in cheaper workers from overseas.”

“This will improve the number of black, Hispanic and female workers in Silicon Valley who have been passed over in favor of the H-1B program. Mark Zuckerberg s personal Senator, Marco Rubio, has a bill to triple H-1Bs that would decimate women and minorities,” it said.

Citing recent examples the campaigners mentioned, in Edison, an electricity company in Southern California and in entertainment company Disney local employees were laid off and replaced by H-1B visa holders. The layoffs have prompted some US Senators to call for investigations into the visa process used by the companies. 

Read more: One-Third Of Apple’s Engineering Staff Is Indian: Report

According to Patrick Thibodeau, senior editor at Computerworld, the US workers who have trained a temporary visa-holding replacement as a condition of their severance describe it as a profoundly humiliating experience. “These workers see a direct connection between the US government’s H-1B visa policies and their job loss, and they are furious,” said he. 

“Real immigration reform puts the needs of working people first not wealthy globetrotting donors. We are the only country in the world whose immigration system puts the needs of other nations ahead of our own. That must change,” the position paper said.

“The displacement of US IT and back-office jobs will be a significant issue leading up to 2016,” notes Phil Fersht, founder and chief executive of HfS Research. “In the US, this will be a bloody, contentious election and immigration reform is right up there for discussion.” 

Many analysts argue that even though H1-B workers displace some American workers, it is equally true that Indian companies have invested billions in the US and created thousands of jobs. The bill if passed can therefore spell trouble for these IT companies.