The move comes as a jolt largely to the Indian IT professionals as H-1B is used by them to work in the US.
US President Donald Trump issued an order to suspend H-1B visas along with other foreign work visas for the rest of the year, stating that the step was essential to help millions of Americans who have lost their jobs due to the current economic crisis. Many of the tech industry’s biggest and most influential companies criticized this move as it prevents highly skilled foreign citizens from entering the US through the end of the year.
While Trump was reportedly mulling on the work visa ban for a while now, the recent announcement would severely affect Indian IT firms and their ability to meet their project deadlines as over three-to-four lakh H-1B visa workers in the US are employed by Indian IT firms like Infosys, Tata Consultancy Services (TCS), Wipro and Cognizant that account over two-thirds of the H-1B visas. Nonetheless, some see a silver lining waiting for tech professionals in India and the move would not be as disruptive as it seems now.
Indian IT in troubled water
With over 60% of engineers in the US comprise H-1B visa holders, and three-fourth being Indian, the ban will surely impact the prospects of the H-1B visa applicants from top Indian IT services firms in India .
With Trump supporting stricter immigrant, non-immigrant visa regimes, the Indian IT firms have reduced their applications for H1-B visas considerably since the last couple of years with efforts to hire more locals in the US, as TCS said in its annual report that it has nearly 20,000 US nationals on its payroll.
However, industry analysts fear that a long term ban of H-1B visas which recruit workers for specialist positions in fields such as IT, science will hurt the project deliverability of Indian IT services firms because of shortage in the talent.
“The overall unemployment rate in the United States nearly quadrupled between February and May of 2020 — producing some of the most extreme unemployment ever recorded by the Bureau of Labor Statistics,” Trump wrote in the order. “Without intervention, the United States faces a potentially protracted economic recovery with persistently high unemployment if labor supply outpaces labor demand.
Trump’s expanded travel restrictions by the newly announced freeze of the H-1B, H-2B, H-4, L-1 and J-1 visas will prohibit about 525,000 people from entering the country, including 170,000 green-card holders who have been prevented from entering the US since April, according to a report by The Wall Street Journal that quoted a senior administration official.
Stating this as a ‘significant number’, the official said President Trump is focusing on getting Americans back to work as quickly as possible after suffering this hit to the US economy based on the coronavirus and the harm it’s done.
H1B Ban: The fierce opposition
The Directive however, is fiercely opposed by business leaders and IT lobbies, who believe it will block their ability to recruit critically needed workers from countries overseas for jobs that Americans are not willing to do or are not capable of performing.
According to the National Association of Software and Service Companies (Nasscom), the new order will prevent Indian companies and thousands of other organizations from accessing the talent they need from overseas. The proclamation will impose new challenge and possibly force more work to be performed offshore since the local talent is not available.
Nasscom wrote to the President and his Secretaries that policies such as these undercut the ability to grow and create jobs, inhibit the provision of critical infrastructure services, and add burdensome new regulatory requirements and costs.
Nasscom argued that American workers are facing greater challenges than they have in years, but that does not mean that talent shortages do not continue to exist. Despite national unemployment trends across the economy, the National Foundation for American Progress found that the unemployment rate for computer professionals actually went down from 3% in January 2020 to 2.8% in April 2020, according to its analysis of the Bureau of Labor Statistics’ Current Population Survey.
“Virtually every segment of the American economy, including manufacturing, technology, accounting, medicine, among others, employ skilled workers from other countries for the innovation, productivity, and skill they bring to their companies or for their clients,” said the Nasscom statement.
Highly skilled non-immigrants are playing critical roles in the delivery of these services and the development of these services and products. Without their continued contributions to the U.S. economy, the economic pain would worsen, industry would slow, and the timeline for a treatment and cure of Covid-19 would lengthen. Moreover, the people who come to the United States on H-1B and L-1 visas pay taxes and contribute to their communities and to local economies in myriad other ways as well.
Studies have revealed the immeasurable value non-immigrants have and will bring to America, said Nasscom stating that the IT body hopes that the Administration will rethink its stated plans to move forward on a series of regulatory changes that would place additional restrictions and costs on visa programs while doing little more than amplifying the harm already being done to the U.S. economy.
Groups representing Silicon Valley technology giants also criticized the move. The Information Technology Industry Council, a high-profile lobby group for large technology companies including Silicon Valley giants Apple, Facebook, Google, HP, Oracle and Salesforce, said Trump’s move came at a bad time, and urged him to reconsider.
BSA, The Software Alliance, whose members include Microsoft and Slack, urged the administration in a statement to “refrain from restricting employment of highly-skilled foreign professionals,” adding that “these restrictions will negatively impact the U.S. economy” and decrease job opportunities for Americans.
Silicon Valley’s technology companies for years have relied heavily on the H-1B, pushing for an expansion to the annual cap of 85,000 new visas and arguing that they need more visas to secure the world’s top talent. Critics point to reported abuses and say the visa, intended for jobs requiring specialized skills, has been used by staffing and outsourcing companies, and major tech firms, to supplant U.S. workers, drive down wages and facilitate outsourcing of U.S. jobs, believe experts.
So far this year, Facebook has received approval for 666 new and extended H-1B visas for its Menlo Park office, Google has been approved for 824 new and extended visas for its Mountain View offices, Apple has obtained approval for 670 new and extended visas for its Cupertino offices, and electric car manufacturer Tesla received 186 new and extended visas for its offices in Palo Alto and its Fremont factory, according to data from U.S. Citizenship and Immigration Services. The H-1B is also widely used by universities — Stanford University was approved for 94 visas this year and the University of California, Berkeley for 39.
The silver lining?
Some however see a silver lining in this entire process. They believe, while suspending H1B visa for the rest of 2020, US President Donald Trump mentioned merit-based H1B visa for all foreign workers. And if merit-based visa is introduced, it can be beneficial for all Indians, especially those who are highly skilled, and are experts in their domain of work.
Under the current system of H1B visa allocation, a lottery determines who gets the visa, and who are denied. For immigration visa, there is The Diversity Immigrant Visa Program, which takes into account the nationality of the applicant, and if citizens from a nation have received more than 50,000 green cards, then immigration visa is denied.
However, under merit based immigration and H1B visa, the US government will consider giving visas to the highly skilled, and in-demand employees. A simple check would be the salary offered by US companies to the H1B visa applicants. In other words, the ones with the maximum salary will be given more preference, compared to low-paid workers.
This will ensure that only the cream of the foreign workers, whose work is in high demand will be given more preference, and also it will be open up entry-level jobs for the Americans, since H1B visa won’t be entertain that.
Indian IT workers, who are the most educated, experienced and seasonal employees with highest salaries, will be the most beneficial category, in case merit-based H1B visa is introduced.
Also as Tech Mahindra MD and CEO CP Gurnani said in an interview to CNBC-TV18, Trump administration’s move to restrict work visas will not lead to any disruption for the Indian IT services sector. He said the industry had prepared itself for unrealistic immigration challenges, and is not overly depending on H-1B visas.
“We were locally hiring and training a lot more engineers. So India’s own applications for H-1B visas have reduced. The impact on India or on Indian companies will be less in the short-term, it is not going to lead to any disruption,” Gurnani said, adding that the US needed Indian IT talent more than the other way round.