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US H1B Bill may impact Indian IT firms

With yet another legislation being introduced in the US seeking to prevent IT firms in India from hiring professionals on H-1B and L1 visas, the Indian IT industry believes that this bill does not address the root cause of the problem – shortage of STEM skills (or those in the areas of Science, Technology, Engineering and Math) in the U.S.The 'H-1B and L-1 Visa Reform Act of 2016', if passed, is likely to have a major impact on India IT firms – for whom the shortage of H-1B visas is a perennial problem.

“The common thread is that the bills focus on ‘hire American first’ …we believe their bill would harm the U.S. economy by unfairly restricting foreign-based global service companies and, equally important, creating tremendous difficulties for thousands of American business customers who need expert IT services support,” said Shivendra Singh, Vice President and Head, Global Trade Development at Nasscom.

Skills shortage

While stating that Indian firms do fall under the 50-50 cap and that this bill would affect them, Mr. Singh said the bill does nothing to address the root cause of the problem i.e. shortage of STEM skills in America. “This is the crux of the problem which goes relatively unrecognised in the current narrative,” he said. He pointed out that the data from the U.S. Labour Department too shows that there is a shortage of skilled people.

According to December 2015 projections by the Department, employment of computer and information technology occupations will grow 12 percent from 2014 to 2024 (faster than the average for all other occupations). However, due to shortfalls in STEM college graduates entering the STEM workforce, there could be 2.4 million unfilled STEM jobs in the US by 2018 – with more than half of these vacancies in computer and IT-related skills. Citing media reports, he said that there would be one million unfilled jobs in the U.S. for computer programming alone by 2020.

“…temporary visas help U.S. businesses and other organisations access the specific type of support they require – where, when, and only for as long as they need it. This helps make Corporate America more competitive,” Mr. Singh said.

Prefer locals

He argued that it is not that companies don't want to hire locally. Companies spend money to send people to work in the U.S., he said, adding that if the relevant skill set is available, companies would prefer to hire locally.

“There is a perception that companies pay low salaries to people who are sent to work on these visas…High-skilled IT workers on temporary visas earn competitive salaries and cost their employers as much or more than their American counterparts. There are various studies which point this out,” he stated.

Currently, there is a cap of 65,000 on H1-B visas, of this about 25,000-35,000 is given to Indian nationals. “I would want to highlight that these are not just the Indian companies which seek visa, but also American companies and other global firms.”

Sanjoy Sen, Doctoral Research Scholar, Aston Business School, U.K. said that most of these companies have already been increasingly employing local nationals in their U.S. entities rather than depend on Indian immigrant staff, which reduces the impact of this risk, provided they continue to do so.

With increasing visa fees and minimum pay requirements for immigrant workers, the financial business case for employing local U.S. nationals over Indian immigrant workers has progressively become more attractive, although Indian IT companies may need some more time to achieve the proposed 50 per cent mix, he added.