There are disturbing signals from the Trump administration over likely changes to the H-1B visa program. This is driven by the Presidents campaign promise of Buy American, Hire American.
Reforms part of the executive order include raising the salary eligibility for such visas to $130,000, reversing the extensions granted to the optional practical training programme for foreign graduates in the U.S., start a rigorous monitoring system for companies employing L-1 visa holders and intra-company transferees.
About the H-1B visa program
It is a non-immigrant visa program in the United States. It allows employers in the U.S to temporarily employ foreign workers in speciality occupations. A speciality occupation is defined as an occupation that requires theoretical and practical application of highly specialized knowledge.
Concerns raised about the current program:
While the H1B visa program is aimed at hiring highly skilled workers for areas were scarcity of such workers exist. A majority of these visas are awarded to outsourcing firms from India. This has drawn criticism from US politicians as companies like TCS and Infosys are accused of misusing the work visa programme to bring low-level IT workers into the US.
Shadow of Protectionism and its impact:
- It will impact bilateral relations with India
- It raises serious questions for the US technology sector (firms like Google, Facebook, Microsoft) which are highly dependent on specialized immigrant workers
- It will also impact the broader American economy
- The step is in line with growing protectionism the world over
Concerns in India regarding the proposed draft:
- The reforms, if implemented may force Indian IT firms to make fundamental changes in their business strategy.
- This would include hiring more American workers and raising salaries they pay to employees working at client locations in the US, commonly known as onsite
- This can erode operating margins of top Indian It firms by as much as 3 percentage points.
Various impediments:
- Firms in the U.S will struggle to fill mid-level jobs with qualified Americans, unless skill-based criteria are used in addition to wage-level restrictions.
- Indian firms for years have been one of the most rapidly growing investors in the United States. If companies impacted by restrictions prefer to shift jobs offshore. This could lead to loss of jobs for American workers.
Indian IT firms need to brace themselves for the upcoming challenge. Meanwhile the Indian government should utilize its diplomatic channels so as to influence U.S. policy in this regard.
