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H-1B Visa Crackdown Could be Blessing in Disguise for India

Indian IT companies may look to rework their economics around these challenges – look at ways and means to bring down the on-site work and even move to other geographies.

Deepa Balakrishnan | CNN-News18deepab18

Updated:February 1, 2017, 8:02 AM IST
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H-1B Visa Crackdown Could be Blessing in Disguise for India
Soon after the news broke, Indian tech stocks, including that of the big four — Infosys, TCS, Wipro and Tech Mahindra — tanked as much as 9% wiping out Rs 44,000 crore from the markets.
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Bengaluru: A proposed new law that will effectively cut down the number of H-1B visa entrants into the US could actually turn out to be a blessing in disguise for India, a technology industry veteran told News18.

Ashok Soota, former president of Wipro and Executive Chairman of Happiest Minds Technologies, said that more work will now move offshore as US is set to face a talent crunch in these specialized sectors.

“The effect will be two-fold: We will bring more of the work offshore, which is a long-term advantage for the Indian IT industry. Besides, it will drive Indian companies up in the value chain, because the kind of people who we send will be premium people, people who are consultants and highly experienced and skilled,” he said.

ALSO READ: H-1B Visa Reform Bill Introduced in US House of Representatives

Soota, who has earlier been president of the Confederation of Indian Industry, points out there are an estimated one million jobs vacant in the US in the IT sector that American companies have not been able to fill. Unemployment rate in this sector is almost negligible.

“They need the skills, they need us. The net impact will drive up costs within the US, as they have a talent crunch,” says Soota.

Every year, there are about 65,000 H-1B visas that Indian techies seek out to work in the US. Currently, visa norms state that those who get H-1B visas earn at least $60,000 per year. But the doubling of this minimum salary requirement means that the number of people who go there will be lesser. The impact will be on Indian and American companies.

ALSO READ: H-1B Visa Issue: India Says Conveyed Interests, Concerns to US

And the potential effect of the H1B clampdown on business could probably lead to US firms weighing in on their government to not go ahead with the proposal.

Secretary-General of the Bangalore Chamber of Industry and Commerce Raju Bhatnagar points out US firms are already taking up cudgels against their government.

“We are seeing a face-off against the government, big companies like Google have even set up a $4 million fund to help migrants,” Bhatnagar said.

However, he cautioned that Indian IT companies may look to rework their economics around these challenges – look at ways and means to bring down the on-site work and even move to other geographies.

ALSO READ: Key Things to Know About H-1B Visas

“Companies do have projects from countries like Canada or UK, but the US is still 55 per cent of our revenue stream for most firms. We will re-set these equations, because, beyond a point, you cannot service clients at higher costs,” he said. That could well mean, again, that US companies lose out on cost-effective work that Indian engineers do for them.

Soota added that having higher salary requirements for H-1B visas will obviously mean that the flow of IT workers to the US will reduce as India won't be able to send that many people at the doubled salary benchmark.

“But I am an optimist. Every time there is a change in US policies, Indian companies, Indian businesses have adapted and have converted into an advantage,” Soota said.

ALSO READ: Of 250,000 applications for H-1B visas in US, majority are by Indian companies

This is perhaps why the IT lobby group National Association for Software and Services Companies (Nasscom) has advised some caution to the Trump administration before it changes visa norms.

“The Lofgren Bill provisions may... leave loopholes that will nullify the objective of saving American jobs...,” said a Nasscom statement, also cautioning that the bill could have a ripple-effect on other industries like nursing, life sciences and engineering.

In an interview with CNN News18, Nasscom president R Chandrashekhar pointed out that IT companies provide services that make corporate America more competitive and efficient, and thus help job creation in that country.

“There are more than one million unfilled jobs in the US, that’s well-documented by the US Labour Department. If, in spite of all this data, some decisions are taken to restrict or constrict the movement of those skills for emotive or political reasons, either these jobs will remain unfilled or jobs will move out of the US. Both of which are not good as far as the US economy is concerned,” he said.

| Edited by: Bijaya Das
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