India freaks out over USA plans to change high-skilled visas

Maxine SotoFeb 02, 2017

In a major setback for the IT firms, a legislation has been introduced in the US House of Representatives which among other things calls for more than doubling the minimum salary of H-1B visa holders.

"The Lofgren bill contains provisions that may prove challenging for the Indian IT sector, and it will also leave loopholes that will nullify the objective of saving American jobs", said C. P. Gurnani, CEO of Tech Mahindra, one of India's largest technology outsourcing agencies and chairman of Indian industry body NASSCOM.

R Chandrashekhar, President, NASSCOM said, "Our strong suggestion is that they should carefully calibrate the conditions keeping in mind the skill shortage in the US".

Technology companies, primarily in the USA and India, have long used the visas to bring skilled foreign talent to America, in effect providing a route for Indian students and professionals to emigrate to the US.

The new order affects a number of visa programs including H-1B, L-1, E-2, and B1.

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The Indian government appears to have taken notice of the reports but it is unclear if it's going to escalate the matter as a diplomatic issue.

Trump's take on the immigration already let the four IT company stocks plunged on the Bombay Stock Exchange, the companies refused to comment anything on the President's take.

Trump's first actions out the door have caused a lot of outcry from both within the USA and overseas - in part because of the signal it is giving to the world of how the US views its role as an influencer on humanitarian issues, and in part because of the direct and chaotic results of those actions, and in part because of the impact it will have on specific sectors (like the tech world). He advocated allocation of visas to those companies willing to pay 200% of a wage calculated. The US issued more than a million visas to Indians in 2016, which accounted for 70% of all H1B visas issued worldwide. Currently, the cap on H1B visas stands at 65,000, out of which 25,000-35,000 are issued to Indian nationals.

The news about the introduction of the bill has not been well received by the stock markets.

As of 2015, Indian IT companies were the top users of H1B visas issued by the USA, with TCS at the top with 4,674 new visas for its employees during the year. "Also, Indian companies should give emphasis on product development so that we can go up in the value chain", he said.

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Venky Ganesan, a managing director at venture capitalist firm Menlo Ventures, says that rather than displace low-wage workers, the program encourages students to stay in the USA after getting their degrees in high-tech specialties.

Another alternative, as suggested by an analyst, is a move towards automation of software services.

A reform of the optional practical training program - which allows STEM students to train in the USA after obtaining a degree at an American college - may include a shorter period of stay, said Peddibhotla.

"However, the fact is that the industry is also changing significantly with delivery models' focus on AI, cloud and robotics, which are coming in very rapidly".

Peddibhotla said the continuance of work authorization for some H-4 spouses of H-1B visa holders is uncertain and undefined in the draft order. "Indian IT Services companies may resort to higher offshore component while negotiating new deals/renewals to protect their margins while being cost competitive".

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