Hell or High Water: India tech firms in lurch over proposed H1B visa changes

By Kshitij Kumar

As changes to the H1B visa to the United States were proposed in the country’s House of Representative, stocks of Indian tech companies plunged across the board. On January 31, shares of outsourcing companies such as Infosys, Wipro and TCS fell as much as 4-5%.

The High-skilled Integrity and Fairness Act 2017, tabled by Democratic representative Zoe Lofgren, seeks to double the minimum salary offered to visa holders and bring it to $130,000. This, according to Lofgren, will ‘remove incentives for companies to undercut American wages and outsourcing jobs.’ The original $60,000 limit was set in 1989 and — as Lofgren argues — the proposed change offers a market-based solution to prioritise American employers that offer the highest salary.

Democratic Representative Zoe Lofgren Photo: Wikimedia Commons
Democratic Representative Zoe Lofgren Photo: Wikimedia Commons

The Indian tech industry is worried that this could lead to a huge fall in the number of jobs available to Indians in the United States. Every year, the US Citizenship and Immigration Services (USCIS) issues around 85,000 H1B visas. About 40 per cent of the visas granted any given year are taken up by employees of major Indian tech firms, according to Felix Verghese of Y-axis, an immigration consultancy.

“Some of the junior or mid-level executives placed by us have been reaching out to seek replacements,” said Felix, “If the changes are implemented, 8 out of 10 Indian executives might have to return.”

Critics of the current H1B visa system say that it is used by the Silicon Valley to replace American employees for cheap foreign labour. As the foreign employee’s visa status is sponsored by the employer, the worker’s position to bargain a better salary is curtailed as mobility is limited.

A House of Representatives report on IT workforce found that H1B workers “received lower wages, less senior job titles, smaller signing bonuses and smaller pay and compensation increases than would be typical for the work they actually did.”

Outsourcing giant Infosys was among the top 5 firms to get the largest share of H1B visas in 2016 Photo: Wonderlane/Flickr
Outsourcing giant Infosys was among the top 5 firms to get the largest share of H1B visas in 2016 Photo: Wonderlane/Flickr

Most outsourcing firms offer a salary less to $75,000, barely above the minimum. At the same time, these firms score poorly on innovation, as shown by patent filings.

The original intent of the H1B visa was to bring ‘highly specialised’ workforce to the United States. Tech companies in the US argue that there is a shortage of qualified American labour to meet its demands.

“All companies will have to take a hit on their bottom-line workforce. The US does not have sufficient skilled local talent and the IT companies will either have to pay more to immigrants or Indian companies will have to find better outsourcing solutions,” said Rituparna Chatterjee from TeamLease, a staffing company based in Chennai.

The Trump administration proposed to replace the current lottery system to grant visas and directly prioritise applicants with higher salaries. The democrats tried to pre-empt the White House by launching this bill. Either way, Indian tech firms should find tactics to bargain better salaries and positions for their employees. The Silicon Valley, on the other hand, should prioritise innovation and talent, rather than undercutting American and foreign workforce.

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