H-1B visa process may ease but not lighten cost burden

President Donald Trump's recent reassuring tweet to H-1B visa holders a few days back may mean procedural easing but could do little or nothing to offer relief on cost front to domestic information technology (IT) firms, said IT experts.

"It may ease up H-1B visa processes in the US but could come at a higher cost (for domestic IT firms)," said an IT analyst with a leading broking firm, who did not want to be named.

Last Friday, Trump tweeted; "H-1B holders in the US can rest assured that changes are soon coming which bring both simplicity and certainty to your stay, including a potential path to citizenship".

This has ignited hopes in the domestic IT sector, which is struggling to maintain its operating margins due to rising costs on account of volatile currency and higher onsite hiring. In the third quarter of the current fiscal, the largest domestic technology services firm Tata Consultancy Services (TCS) reported an operating margin of 25.6%, down from 26.5% in the second quarter. The second largest IT company Infosys' operating margin is down to 22.6%, which has fallen from 31.8% in 2008.

Shivendra Singh, vice president and head - global trade development at National Association of Software and Services Companies (Nasscom) said Trump's tweet emanated mixed message.

He said while it speaks of US's acceptance of India's long-standing argument that there was an "acute" shortage of skilled workforce in the US, it also aroused concerns over the implementation of Notice of Proposed Rule Making (NPRM). Singh feels NPRM could cause logistic concerns for petitioners of H-1B and may shrink visas for the petitioners under the regular category.

"If I look at the tweet, I would have two reactions. First, it is in absolute sync with what has been the long-standing view of Nasscom. We have been saying that the US needs to attract the best and the brightest from around the globe to maintain global technology leadership. There is actually an acute skill shortage that all US sources, including the White House, talk about. This is very reflective of the stance we have had," he told DNA Money.

The IT lobby body's spokesperson on global trade also felt the proposed change in the order in which the H-1B petitions could be adjudicated for 2020 could see a cut under the regular category, where India files the largest number of petitions.

The NPRM, which will create a pre-registration system for H-1B visa, talks about flipping the preference order of adjudicating temporary work permit visas under general and masters from the US university categories.

"This means the master degree will get into H-1B part by giving preference to masters (20,000) first. This will eat into H-1B cap numbers as well, which is 65,000 under the regular category. It means there may be a preference given to masters or advance degrees from a US institution for higher education, which may not reflect well from a pure skills perspective because skills do not necessarily mean an advance degree or a master degree," he said.

Singh said this would change the sequence of visa beneficiaries with those with the master degree being considered first; "in today's world, you may have a data scientist who is a graduate but is more skilled than who has done his masters because of the way the jobs are evolving. This change may not be a true reflection of what may be the need of the hour".

Ganesh Natarajan, executive chairman and founder of 5F World, differed on this saying the launch of NPRM would be very good for the Indian tech sector.

"If it (NPRM) is implemented it will be very good for the Indian tech sector, not only will the well-experienced people get a faster track to the US H-1B, green cards and citizenship but even the regular guys would have a larger opportunity because quota will be separate for master degree," he said.

He also believes online filing and processing of H-1B will simplify and hasten the visa process for employers and the Department of Homeland and Security.

Nasscom's Singh feels that with just around three months left for the new pre-registration system to go online, there wasn't enough time for the US temp work visa applicants to "prepare" for it.

"We have less than two and a half months to implement the pre-registration system. While companies have already begun assessing their need and planning their submissions if they introduce this element now for 2020, which begins in April 2019, it may not be enough time for companies to prepare themselves," he said.

Natarajan said Trump could have softened his stance on H-1B visas as he was drawing much flak on his anti-immigration policies and Mexican wall crisis.

"They (Trump administration) just want to say we are not against people coming from outside, we are actually saying we welcome people with masters and excellent qualification. The general perception today is that it was becoming very difficult for people to work in America. Also, Canada was getting a lot of attention and people were moving to Canada. He (Trump) is trying to restore the balance by saying that America still loves intelligent people," said the former Nasscom head.

The analyst, who spoke anonymously earlier in the article, said there was still no clarity on what alterations could be adopted in the H-1B visa but all "noises" suggest there could be procedural changes but cost-related implications may persist.

"The noises till now suggest that procedures might soothe but cost-related implication could continue to be severe for the Indian companies. That is what most of the Indian companies are factoring in and they are clear that they can devise a strategy so as to not compromise on long term business fundamentals arising from such situations. So, long-term business fundamentals wouldn't change but near-term hiccups that we have seen in the last two quarters will continue for some time," he said.