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July 18, 2017 @ 10:55 AM

H1B Visa Imbroglio

H1B Visa

Published: Thursday, 6 July, 2017 11:08 AM 

H1B Visa Imbroglio

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Read Current Affairs Topic: H1B Visa Imbroglio

H1B Visa is a temporary non-immigrant US work visa which can be used by any US employers to hire skilled foreign workers. In order to get an H1B visa, the beneficiary must be on the payroll of the US based company. Other non-immigrant work visas in the US include L1A and L1B visas. The L1 (both A and B) visas petition can be filed by the parent, affiliate or the branch of a foreign company where the person has worked at least for one year in the preceding three years in the capacity of manager, executive or special knowledge work. Not all employers are eligible for L1 visas because of which H1B visa is popular among employers.   

The H1B is an important political issue in the US as a common perception is prevailing in there that foreign workers by virtue of H1B visa are taking up the jobs of the locals. For that matter, a bill was introduced in the Congress this year proposing an increase the minimum wage limit under the H1B visa to US$130,000 from the current US$60,000. Currently, only 3% of the H1B visa holders get remunerations of USD130,000 or above. Thus the new measures will virtually close the skilled job market for the Indian techies.

However, the job security was an important electoral promise of the US President Donald Trump during his hustings. ‘Buy American, Hire American’ was his slogan and the recent proposals for curbs on H1B are not surprising for any one.

The new visa policy is expected to be announced in November and consequently from the next year, the visas could go to applicants with the highest wages and skills, and the number of H-1B visas issued may also be reduced since the focus is to "hire Americans". The US Labour Secretary has proposed for increasing the minimum salary of foreign workers on H-1B visas, from the most sought-after by Indian IT firms, from the existing US$60,000 to at least US$80,000.

Every year, Indian tech firms walk away with the lion’s share of the 85,000 temporary H1B visas issued through a random lottery by the US Citizenship and Immigration Services, allowing US companies to employ foreign workers in specialty occupations. In the year 2015, Indians accounted for 70% of the all beneficiaries of H1B visa programme. The proposed changes in the US H1B visa are expected to impact both the US and India.

Impact On The US

After the H1B imbroglio, the US companies may find some skilled workforce locally but the numbers will be much less than what is needed. The cost of hiring skilled workforce would also increase. Till now, the large supply of technologists from India has kept technology wages in the US from soaring too high, especially when demand rises sharply as in the current social media boom. It may also make the US based companies economically less competitive in the globalised world where cut throat competition is always putting pressure on the margins.  

Impact On India

In India, its fallout is being felt with the recent announcement of retrenchment in Cognizant which sparked protests. The Trump’s crackdown on H1B visa can directly affects the job prospects of 56,000 software engineers.

Once the proposed changes are implemented, Indian IT companies will not be able to send local engineers to work in US, as they would have to pay them a very high salary after the threshold salary is increased. The Indian workers would have to be paid more than American workers, making them a costly proposition. Moreover, it will be difficult to get them back home and make them work for the same salary.

The IT companies in India that enjoy significant cost advantages by sending Indian engineers to the US for a lower salary will face immense pressure. The impact on small IT companies is expected to be much severe.

The IT sector in India contributes 9.5% of the GDP and generates direct employment for around 3.7million workforce. Any jolts faced by the Indian IT sector will definitely be felt by the entire economy.

However, this is not the only US-centric problem as Australia also abolished the 457 visa programme used by over 95,000 temporary foreign workers, the majority of them Indians, to tackle unemployment. Moreover, the countries like UK and Singapore have also introduced similar restrictions recently.

The left term impact of this new anti-globalizations and protectionist trend depends on how Indian IT sector will cope with the crisis. Every crisis creates an opportunity to re-invent and succeed.

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