With sea changes being undertaken by the new Trump administration when it comes to immigration, the future of the highly sought H-1B visa still remains unclear. In what seems to be the latest in series of moves by the new administration to regulate the flow skilled professionals coming to the US for employment, the government on the 4th of March announced that from April 3rd, the option of premium processing of H-1B visas would be temporarily abolished. This is a move aimed at abolishing the option that provided shorter wait time and helped companies in the US expedite the process of acquiring skilled talent from other countries.
Under the current immigration system of the US, companies had the option submitting applications for H-1B visas for potential employees can pay extra for expedited processing, which is referred to as premium processing. A process-which usually took up to three to six months of processing time- could be sped up by paying additional fees of $1225 or about Rs 80,000. This ensured (https://www.uscis.gov/forms/how-do-i-use-premium-processing-service) a response the US Citizenship and Immigration Services in a period of 15 days or else the amount would stand to be returned. The suspension now stands to implemented for a period of six months, until its further ratified.
Hints of a tougher immigration policy
With the Trump administration and several US lawmakers rooting for the "Protect and Grow American Jobs Act" this move comes in light of previous decisions that have sought to bolster the country’s ability to provide jobs for its citizens vis-a-vis outsourcing them to skilled professionals from other countries. Although the current suspension of premium processing is aimed at streamlining the application process for H-1B visa, it would have a strong short-term impact and points towards the possibility of a tougher immigration policy being created in the near future.
The premium processing option has been an option that’s been used many of the big Indian IT companies and multiple start-ups across the Silicon Valley. A fast way of obtaining skilled talent, this move pushes back the ability technology companies in the US to bring foreign workers to meet their talent demands. The effect is this will also be felt across other several other industries medicine, journalism, and academia.
For IT companies back home this has created confusion has given its timing, many projected plans are now in a state of limbo. “Tier-I Indian IT services firms largely use the premium processing category for H1B visa for their employees, since they can easily afford the additional $1,225 fee. But, there will be uncertainty, as they will have to wait even for ongoing projects,” said Pareekh Jain of HfS Research India in a report published in the Business Standard. Given the fact that for many years many Indian IT services company, US has been one of their biggest markets, a sudden change in the H-1B policies is bound to create confusion. And uncertainty, traditionally, has never been a good friend of predictions. In addition to increasing the general caps in the minimum wage that have to be paid for H-1B visa holders, the difficulty in getting such visas is bound to the profitability and financial performance of major IT players in the industry.
India’s ‘measured’ response
The current argument used by many US lawmakers in face of growing demands to favor job growth within the country, as opposed to outsourcing them has been that, “ many companies abuse the H-1B program as a way to hire foreign workers who take jobs away from Americans, at lower salaries.”
Articulating this sentiment, R Chandrashekhar, NASSCOM president shared, “This narrative has been going on for a while now that Indian IT workers come to the US and that they take away jobs, that in general they simply displace American workers and that these are low-paid, not even necessarily high-skilled people who are actually taking away jobs from better paid and skilled American workers.” And it was the intent to address these growing concerns that he was in Washington this week leading a delegation of IT industry body to engage with members of the new US administration, adding that such narratives are not necessarily “accurate” and are often “a mix of emotive anecdotal stories”. “The data, not just our data, but the US government’s own data also tells a very, very different story” he explained.
Explaining the “yawning gap between the facts and the perceptions” Chandrashekhar added, “the Indian IT industry actually contributes immensely to the US economy in terms of jobs that are created in America, both directly and indirectly.” Especially in the case of STEM-qualified workers where the shortage of skilled professionals will be further impacted by recent events.
“The biggest contribution to jobs, of course, is what the IT industry provides in terms of services to US corporates, 75 percent of the Fortune 500 companies, which enable them to be more productive, more efficient, and more globally competitive, and thereby helps them to be the job-creation engine in the US,” he added.
Old issues, fresh impetus
The Indian IT sector, although being at the forefront of facing the impact of such changes has over the years faced many socio-economic situations which have prepared most of the major players in the industry to face the brunt of evolving immigration policies. Following both the dot-com bubble burst at the turn of the millennium and the global economic recession of 2008, similar protectionist policies were followed to boost the generation of employment within the US. As a result, the current talks of placing restrictions on the H-1B scheme aren’t new and sentiment suggests that India’s IT sector may even be prepared for it. With the operating models of many IT companies evolving to reduce the dependency on cost saving models (that leads to companies depending upon relatively cheap labour cost of hiring Indian tech talent in the US), IT companies might be able to mitigate some of the long-term impacts that such policies on their financial performance.
Abidali Neemuchwala, CEO of Wipro, India’s third-biggest software services company, pointed out that “over time, Wipro has positioned itself comfortably in a business model where we’ll be able to operate with a lower number of [H-1B] visas”.
That is also the case with Infosys and Tata Consultancy Services, India’s biggest IT services player.
Looking at the past, the Indian IT services sector has traditionally been heavily dependent on the easy availability of H-1B visas as obtaining skilled labour from India’s growing pool of tech talent has been a more cost-effective option as compared to hiring local talent from the US. This has partly been the reason for the growing sentiment that companies in the US should employ more local talent. But as the debate continues to find a consensus, Indian IT firms need to evolve their business models, while negotiating with the US administration to paint a complete picture. By creating more innovative service option and perhaps looking at leveraging the advancements within the field of AI could be one possible solution that IT companies resort to in order to maintain their strategic position within the US market.