Trump’s New Visa Rules Could Spell Doom For India’s IT Outsourcing Industry

Posted by Akhilesh Nagari in GlobeScope
February 9, 2017

The efforts of Trump’s administration to refurbish the existing work-visa program has triggered concerns that it may cripple down the $108 billion Indian technology outsourcing industry.

Congressman Zoe Lofgren, a Democrat, introduced a draft law, in the US House of Representatives last week, which proposes a market-based allocation of H-1B visas. The bill also calls for minimum wages to be assigned at $1,30,000 for H-1B visas (instead of the $60,000 in existence since 1998).

H-1B visa is a non-immigrant visa, which allows US employers to recruit or employ professional foreign workers within the US for a period of three years, which can be extended for another three years.

As per the US Labour Department record, out of 12 lakh high skilled jobs certified under H-1B visas in 2015, the Indian IT industry accounted for 2.54 lakh position. In 2016 the number was 1.72 lakh. Under existing US laws, 65,000 H-1B visas are issued every year. Around 70% of H-1B visas went to Indians in 2016, many of whom work in the IT industry.

Dire changes in the H-1B and L-1 visa policies are expected to deplete revenues of Indian firms by as much as 10%. Recently, the Managing Director of L&T Technology Services, Keshav Panda, said, “We have over 1,600 engineers in the US and around 65% of them are on H-1B visas. If the salaries were to be hiked, our calculations suggest an impact of 2-2.5% on Ebidta margins.” Indian firms also use the L-1 visa to transfer an executive from one of its foreign offices to a US offices.

Mr Trump, during his presidential campaign, had issued a statement to end the use of H-1B visa as a cheap labour program – though, at other times, he has supported the immigration of highly skilled personnel. His wife, Melania Trump, had also stated that she used an H-1B visa to work in the US as a fashion model.