No Snoozing In Silicon Valley

In a bid to enforce President Donald Trump’s ‘Buy American Hire American’ policy, the US government might put in place further ­restrictions on H1B visas, of which India is a major beneficiary. The current proposals to not extend H-1B visa of those waiting for permanent residency or a green card is likely to aff­ect half-a-million Indians working in the US. Though the US government has said that there is no change in the H1B visa policy for the moment, it is considering extending the H1B visas by just one year instead of three for those holders whose green card application is under process. The proposal was circulated as a memo by the Department of Homeland Security in the US and seeks to end extensions to H-1B visas of those whose applications for green cards are being processed.

The proposed policy potentially means that if visas are not extended at all, or extended for just one year, several H1B visa holders might have to return to India. According to rough estimates, between 500,000 and 750,000 people might be affected by the move. And that could ­severely affect engineering and IT talent in the US and take a toll on the bottomlines of Indian companies who send IT workers to the US.

Experts are of the opinion that if passed, the policy will be detrimental to both US and Indian companies. “US businesses have already expressed displeasure with the changes. The industry body has rep­ortedly termed this a ‘bad policy’,” says D.D. Mishra, research director, Gartner India. “Businesses in the US are worried about losing talented people who have been working in the country for a long time. This will be a no-win situation for India as well as US businesses and IT professionals will be at the receiving end.”

At the same time, Indian IT companies could be looking at a huge financial hit. “The impact of this will be quite big on Indian IT companies as this category of engineers and IT workers are billed at very high rates,” says Jaideep Mehta, IT sector expert and CEO, Vccircle.com. “If they are suddenly taken out of the system, we are talking in terms of billions of dollars of loss to the system. This is very ­serious and not a trivial matter. Even if 300,000 people were to be affected, at a modest annual billing of $200,000, the total billing will be in the range of $ 40-50 billion, assuming reasonable ­capacity utilisation.”

This is not the first time there has been an attack on H1B visa holders. A couple of months ago, a new legislation—the Protect and Grow American Jobs Act, HR 170—introduced by Republican U.S. Representative ­Darrell Issa, was passed by voice vote in the House Judiciary Committee of the US Congress. The bill proposed to raise the ­minimum salary of H1B visa ­holders from $60,000 to $90,000, and also to put a check on the work vis­as used by a slew of Indian companies who send ­their workers to the US.

There was a general opinion that HR 170 would harm US businesses and imp­ose an extraordinary amount of bureaucratic red tape on a programme that contributes greatly to the country’s prosperity. It was designed to disrupt the marketplace, threaten ­thousands of US jobs and stifle US ­innovation.

The proposed increase in the minimum salary of H1B holders is certain to hit the margins of the US projects of Indian companies. Also, with other ­restrictions related to hiring in the US, companies will be forced to hire locally. Given the difference in salary between American and Indian workers, this will increase the wage bill of the companies.

Before this, there was another bill floated in the US Congress to control imm­igration, particularly through H1B visas. In September, Senators Tom Cotton and David Perdue proposed the Ref­o­r­ming American Immigration for Strong Employment (RAISE) Act, which aimed to reduce the number of legal migrants (green card holders) allowed in the US by 40 per cent in the first year and by 50 per cent over a decade.

HR 170 is more focused on H1B visa holders, and is likely to impact Indian companies more as they are the largest beneficiaries of these visas. It specifically prohibits employers in the US from rep­lacing Americans with H1B employees.

Though India’s software representative body, NASSCOM, feels that there is no concrete proposal in this regard and there has been no official announcement regarding the cancellation of extension of H1B visas, it is of the opinion that any such move would be disruptive and would be detrimental to both Indian as well as American companies.

Even in the US there is opposition to the new proposals. “It will be a catastrophic move for US companies as the H1B programme is their life and blood,” says Rogelio Caceres, co-founder & CCO of the US-based LCR Capital.  “If (visa) extensions are eliminated or limited, half a million engineers could be affected. That would decimate the R&D and development work in the US. Many projects would be ­affected. As it is, there is a talent shortage in the US—this will be talent elimination. There is already a demand and supply gap of engineering talent and US universities are not equipped to fill this gap.”

One fallout of the entire campaign has been that there is a heightened demand for other visas, such as the EB5 visas for permanent residency in the US. “In 2017, there was a significant demand for the first time for EB5 visas through which one can get a green card directly. Many of them were from tec­hies,” says Mark Davies, global chairman of the US-based Davies and Associates LLC. The EB5 visa gives a green card dir­ectly in exchange for an investment of $500,000 in the US. “Over the last one year, interest on EB5 visa has increased by over 70 per cent as the attacks on H1B increased,” says Caceres.

So, will the Trump administration garner enough support to clear the proposals against the H1B visa programme? Experts, both in India and the US, feel that with opposition against the proposals mounting primarily in the US and with the US IT industry vehemently ­opposed to such proposals, there is little chance of these getting passed. “There is little support even in the Republican party on the proposals. Donald Trump doesn’t have enough support on this radical proposal,” says Caceres.

Mehta, however, feels that Trump can still pull it through. He says: “Despite the lack of support in the US, especially the industry, I am not so confident that Donald Trump will fail as he has been successful in getting the HR 170 bill passed and also the travel ban cleared. The administration’s usual strategy is to take an extreme measure, and then dilute it a little to achieve what they wanted in the first place. He may just pull through this as well and that will be detrimental to both the US and Indian industry.”

There is also a proposal under which spouses of H1B visa holders will be denied a work permit in the US. This again is exp­ected to be detrimental to Indian techies and discourage many from choosing the US as a work destination. “As a majority of the IT professionals have a working spouse, many of them will find it difficult to migrate due to the restrictions,” says Mishra. “The US will gradually lose its significance as an interesting destination for IT professionals and this will impact US business more. These changes are akin to shooting the tyres of a racing car.”

India needs to up the ante and do something about the ongoing H1B programme in the US considering that almost 70 per cent of all H1B visa holders are from India and India corners a significant number of the 85,000 H1B visas issued every year. The issue has to be taken up diplomatically and bilaterally to ensure that both the US and Indian IT industries are not adversely affected. The iron is hot in the US. This is the time for India to act.