H1-B VISA - A STORM IN THE TEA CUP

By Ruma Dubey

Three years ago, there was a similar call by some Senators of USA – demanding drastic changes in the H1B visa norms, which would have hit the Indian IT industry hard. And then Trump started campaigning and the rhetoric was back. From the last one year, the Indian IT industry knew that their mulch cow, the outsourcing industry was in the eye of a storm. And today, the IT stocks are being beaten down to pulp as the same H1-B visa row has resurfaced.

Yesterday, California Republican Darrell Issa re-introduced a bill aimed at cracking down on the H-1B visa abuse by making major amendments to the existing program, allowing only highly skilled foreign employees work in the US.

The argument given is that the new amendments will help in cracking down on visa abuse by companies that hire average workforce from other countries for cheap salary, thus depriving American jobs.

USA is the biggest outsourcing market for India and such a bill for the Indian IT could mean a big blow. Last year in April, 85,000 H1-B visas’ were handed out and the quota was finished within a span of five days only – out of this 60% of the H1-B went to the Indians. Now this visa is given on a lottery basis; so it not as though this has hit the IT industry out-of-the-blue. Thus today, thanks to the media going on and on about this has created a sense of panic and thus the collapse of the IT stocks.

As per the latest proposition, the minimum salary of H-1B employees is to be pegged at $100,000, up from the current $60,000. It has also proposed making a Master’s degree mandatory for the H1-B visa holders.

This is sure to have an effect on the Indian IT industry because a hike in the minimum salary will not mean that company will be able to pass on the increased cost to the client; the company will have to bear it. Thus the margins will come down.

What this will mean in turn is that Indian IT companies will earn better if the business is done offshore rather than outsource. Yes, we live in a flat world and all are connected through the world wide web. So wont it make more sense to do the work out of India, where a pay of $15,000 to 20,000 is all that is needed? Only the critical human resource, which needs to be on the site will be outsourced.

We could also see Indian IT companies looking at newer markets with more aggression. It is not as though all the IT work in the world happens only in USA; Europe, Australia, Middle East, there are so many more places where India can now look at. They all will also look increasingly at domestic business too and the digitization drive should surely help them earn some moolah in India.

The Indian IT industry has been sedentary for too long; working on the same old patterns. Maybe this will finally prompt the sector to look at innovation and explore the newer options where India can once again lead. Yes, innovation has to be the buzz word for the sector over the next couple of years.

Remember, all this is being done to protect America and American jobs. On principle grounds there is nothing wrong; if foreigners were taking away jobs in India, would we tolerate this? Within India itself, people from other states taking jobs of Maharashtra is not being tolerated so need we say more?  And this bill if it becomes a law, will surely hit Indian IT companies hard. But to try and give this a geopolitical color would be wrong – there is nothing retaliatory or revengeful here; this was very much in the offing and our Indian companies will have to deal with this change if and when it happens. Yes, India is today on the global map, thanks to IT and USA helping give Indian IT the world platform. Nasscom probably needs to strengthen its communication and urge IT companies to respect the law.

The world is our oyster and this is probably the time to explore the new world….