IT's H-1B positive: Time for Indian IT
companies to breathe a sigh of relief
BY NEHA ALAWADHI,
ET BUREAU | UPDATED: APR 20, 2017, 07.40 AM
IST
NEW DELHI: Indian information technology
services companies can breathe easy for the moment, with US President Donald
Trump choosing not to push for legislative changes in the country’s visa
programme for technology workers in his latest executive order.
Instead, on Tuesday, Trump signed the executive
order named ‘Buy American and Hire American’ in which he directed the US
secretary of state, attorney general, secretary of labor and secretary of
homeland security “to suggest reforms to help ensure that H-1B visas are
awarded to the most-skilled or highest-paid beneficiaries”.
The $150-billion Indian outsourcing industry has
been bracing for drastic changes in the H-1B visa programme, the most favoured
route to send Indian engineers to the US, which allowed IT services firms to
keep costs low and gain an advantage over global competitors.
“Nothing is being proposed that would impact or
change the fiscal 2018 H-1B lottery that is currently underway. The proposed
changes are forward-looking and non-specific,” said the industry body National
Association of Software and Services Companies in a statement.
Trump
had passed the buck to the American bureaucracy to “make some legislative
changes, as opposed to trying to force through the draconian measures that had
been suggested during his campaign”, said Fersht.
Those terms, which included an increase in
minimum annual wage to a whopping $130,000 for a skilled engineer in the US,
would have had a “crippling impact on Indian IT competitiveness in the US”, he
said.
There are four bills proposed in the US related
to H-1B reforms, six related to outsourcing and three that deal with
immigration.
Industry experts too were of the view that Tuesday’s
executive orders were “not as bad as expected”. Phil Fersht, CEO of research
firm Horses for Sources, told ET the order is “very good news” for the IT
industry.
Trump had passed the buck to the American bureaucracy to
“make some legislative changes, as opposed to trying to force through the
draconian measures that had been suggested during his campaign”, said Fersht.
Those terms, which included an increase in
minimum annual wage to a whopping $130,000 for a skilled engineer in the US,
would have had a “crippling impact on Indian IT competitiveness in the US”, he
said.
The current H-1B programme, which is
lottery-based, allows a maximum of 65,000 visas for the general category and a
further 20,000 for people who have a US master’s degree from an accredited
institution. The application cap for financial year 2018 was reached within
four days of the lottery opening this year.
Indian IT companies have been accused of
misusing the H-1B visa regime, which they have consistently denied. For their
part, companies have been working towards a business model,” he said.
Infosys, India’s second-largest IT company, said
it continues “to invest in the local communities in which we operate, including
hiring local American top talent, bringing education and training to our
clients to shrink the skills gap in the US, and working with policymakers to
foster innovation within states and across the country”.
UNINTENDED CONSEQUENCES
Nasscom also warned of the unintended
consequences of using salary levels or skills as the metric to judge the merit
of an H-1B application as it “could advantage certain regions such as Silicon
Valley over other regions of the US” while also placing “federal bureaucrats in
the role of technology consultants and human resource specialists”.
The latest order is regarded as an attempt to
improve the implementation of existing laws. “The US government has alternately
loosened and tightened restrictions, and there hasn’t really been any change to
a law. He (Trump) is only talking about tighter implementation of the existing
policy,” said Sid Pai, an expert on the Indian outsourcing industry and former
Asia-Pacific head at consultancy ISG. The impact of the latest executive order
would be to make Indian outsourcing as well as US technology companies more
compliant with the spirit of the law. “Even before this latest executive order
it is clear that the Indian service provider industry was taking steps to
reduce dependency on H-1B as reflected by the drop in overall applications for
H-1B from 236,000 last year to 199,000 this year. The majority of this
reduction is thought to be the reduced number of applications that the service
providers are submitting,” Peter Bendor-Samuel, CEO of the Everest Group, told
ET.
GOVERNMENT
IN TALKS
An external affairs ministry spokesperson said
the government was in touch with authorities in the US and Australia on changes
in their respective tech visa policies, and was assessing the impact in
consultation with stakeholders.
The changes announced by Australia merely entail
replacing one scheme with another, the spokesperson said, adding that officials
there had assured the impact will be negligible on Indian IT workers.
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