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It's H-1B positive: Time for Indian IT companies to breathe a sigh of relief

19 April, 2017 6:42 PM
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It's H-1B positive: Time for Indian IT companies to breathe a sigh of relief

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.

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 which is less dependent on visas. “As long as it is fair and even, a level playing field for everyone, we are committed to stay compliant,” Rajesh Gopinathan, CEO of Tata Consultancy Services told ET.

“We have said that our dependence on visas will progressively reduce as our size and scale increases... We are shifting to a less-visa-dependent 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”.

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.

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.

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Source: economictimes.indiatimes.com

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