NEW DELHI: Fresh restrictions on work visas for technology workers proposed by the Trump administration are set to further exacerbate difficulties faced by Indian outsourcing companies. The proposed regulations — like the HR 170 — as well as the doubling of visa fees announced earlier, have increased the burden on local technology firms placing them at a disadvantage compared to overseas rivals, according to a software industry lobby.
“The US government’s immigration policy is creating an artificial distinction between one company and another,” said R Chandrashekhar, president of the National Association for Software and Services Companies. “Our problem, which we have brought to their attention, is that you cannot and should not be doing things which discriminate against Indian companies even though you have not named them,” he said.
Nasscom has brought this disparity to the attention of the Indian government, the official said.
Last month, The Protect and Grow American Jobs Act (termed as HR 170) was passed by the House Judiciary Committee and is now awaiting a nod from the US Senate.
The HR 170 Bill currently classifies any company that has more 15% of its workforce working onsite as “visadependent”. These companies have to then necessarily increase the minimum salary for H1-B visa holders from $60,000 to $90,000 and cannot move employees on visa from one client to another. Clients have to certify that the visa holder is not displacing an existing employee for his/her the entire tenure which could be six years.
Nasscom’s Chandrasekhar termed these as “unbelievably onerous conditions.” “We see this as clearly discriminatory because it affects only the large Indian companies and will have the effect of tilting the playing field against Indian companies,” he said.
The proposed visa regulations come at a time when Indian IT outsourcers — which have nearly half their employees working onsite — are battling the impact of higher visa fees.
Drop in Visa Applications
Since January 2016, all companies which have over 50% of their workforce on visas in the US have to pay an additional $4,000 – $4,500 per visa, Indian companies with a higher percentage of onsite workers in the US are most affected by the fee increase.
American outsourcing companies with large Indian operations, typically employ more locals in the US and do not classify as visa-dependent companies.
Infosys, Wipro and TCS did not comment on the story citing silent period.
HCL did not respond to ET’s queries.
Last week, in a statement, the US department of homeland security said it will repeal an Obama-era rule that allowed spouses of H-1B visa holders to work in the US. It also said that it will recast the lottery system of granting H1-B and define categories of occupations that will be eligible for these visas.
In addition, increased vetting of applications, more processing time, and higher scrutiny of people who are sent on visas has led to a drop of nearly 50 % in visa applications from Indian outsourcers, according to Nasscom.
TCS got 56% less visas approved in FY16 compared to FY15 while Wipro’s numbers dropped by 52% to 1,474 visas, according to data compiled by the National Foundation for American Policy (NFAP). The visa approval data for fiscal 2017 is not available, as yet.
Even as visa grants for Indian outsourcers have decreased, those for American technology firms show an upward trend.
Amazon’s H1-B approved applications increased by 33%, Intel by 64%, Facebook by 18% and Microsoft by 19%. Numbers for Google, Cisco, and Apple were also up, according to NFAP with the exception of firms such as IBM.
For sure, these companies do not compete with Indian IT outsourcers. But they are drawing from a pool of H1-B visas, the cap on which has remained constant at 65,000, say industry experts.
Google, Facebook and Apple did not reply to ET’s queries while IBM, Microsoft and Cisco refused to comment. In a blog post in 2015, chipmaker Intel argued for an increase in the cap of H1-B visa saying “the United States has a high-skilled workforce shortage in the STEM fields critical to innovation: science, technology, engineering and mathematics.”
Shivendra Singh, vice president of Nasscom said that that the top seven Indian IT companies now take up under 10,000 visas which is around 15-20% of the total H1-B visas allocated.
“More than 80% of H1-B visas can be brought in by companies who will not have to undergo the onerous provisions of a mean wage based on region and occupational category, client attestation and many other provisions that will negatively impact the H1-B dependent companies only,” he said.
Singh is of the view that the level playing field for business will be altered if the HR 170 bill goes through.
Legal experts say the clauses within HR 170 will be very hard to implement not just for the companies but also for the government.
“Some of them are very impractical and will be discriminatory in the impact they have on the Indian companies,” said Poorvi Chothani an immigration lawyer who reckons it is the business model adopted by the Indian outsourcers for so many years that has led to the current impasse.