Trump's H-1B gag may hit US more than India

The proposed new regulation on H-1B visa being considered by the Trump administration is likely to adversely impact the domestic information technology (IT) firms with the possible stalling of onsite projects on account of shortage of technically skilled manpower in the US.

Ganesh Natarajan, founder of 5F and chairman of National Association for Software and Services Companies (Nasscom) Foundation, told DNA Money that it could raise the issue of "sustainability" of US projects for Indian tech companies.

"It's (project's) sustainability (could be affected). If you are doing a project (in the US) and people will have to go back prematurely then project execution (will) becomes a problem. They (Indian IT firms) will have to respond to it by hiring more locals. Finding people (technical manpower) will be a problem apart from (crimped) margins. There is a huge shortage of technical workforce in the US. Which is why free movement of skilled workers is very important," he said.

Natarajan believes domestic firms could be compelled to execute these projects from India.

In the latest clampdown on H-1B visa users, the US government is contemplating a new rule by which extension of H-1B visas of those who have applied for green card would not be automatic. Currently, on expiry of H-1B visa, if its holder has applied for a green card, then the visa gets extended till the application is processed.

This is expected to be slightly altered wherein the visa holder would be asked to return to his country till the time the process of green card is completed. This has sparked a fear that it could lead to around five lakh IT professionals being sent back to India.

H-1B visas are widely used by information technology (IT) firms based in India to send their techies for projects in the US. It is estimated that around 70% of the 85,000 H-1B visas currently being issued annually is used by Indian techies.

R Chandrasekhar, president of Nasscom, told DNA Money that the string of restrictions that have been imposed by the US on H-1B visa over the past few years were making it "unattractive".

"All of these (tightening of rules) continue to make the H-1B visa route a little bit more unattractive, a little more difficult and a little more uncertain. This is one, out of a series of measures that we have been seeing - one after the other. Each one has little impact, but not an overwhelming impact. But when you take the cumulative effect of all these changes then, I think, it is very significant," he said.

Though, the Nasscom chief feels that articulating any negative impact of proposed moved by the US administration would be a "far-fetched presumption at this point".

"If it (new rule) goes through - and what goes through is simply reiteration of power of adjudicating officers - but if that reiteration results in all of them (visa officials) exercising it in a mindless rejection (of H-1B visa extension) then yes it could affect many things but that is slightly a far-fetched presumption at this point," Chandrasekhar said.

He said it would have to be seen whether visa officials did "resort to mass rejection".

"It remains to seen because the fact of the matter is that there is still a skill shortage in the US and the unemployment rate among them is less than 2%, which clearly shows that there is a deficit (of skilled workforce) . So, this blanket rejection of all extensions (of H-1B visa) cannot be done without the US itself getting badly affected," the Nasscom head reasoned.

Over the past few years, US has placed deterrent at every stage of H-1B visa.

"If you look, there are three levels of hurdles. First is getting the visas in the first place, which is done through a lottery system. Second is confirmation to travel and a steep fee. Now, the third one is conversion of your H-1B visa into resident status. Every stage is becoming more difficult," said Natarajan.

In order to counter the latest deterrent, he sees techies applying for green card within three months of getting the H-1B visa. Currently, IT professionals on US deputation usually initiate process of acquiring a green card after two years of getting their employment visa.

T V Mohandas Pai, chairman of Manipal Global Education and former HR and finance head at Infosys, said it would be mostly the US tech firms which would be hit by the Trump government's latest move as they were the ones going after IT professional with green card.

"A great majority of people who have applied for a green card under H-1B belong to American companies, not Indian companies," he told DNA Money.

According to him, the total number of Indians sent from India on H-1B visa to the US could be not more than 1 lakh. Out of this, Pai estimated, 5,000-10,000 techies could be those who have applied for green card and were staying in the US.

"American companies want people to come and stay with them for long. Indian companies are project-based and so techies employed with them do the projects and go back (to India) – their model is offshoring. It is mostly American companies which hire people on H-1B and make them apply for a green card. It (new regulation) will hurt the American companies, and offshoring will benefit," said Pai.

Nasscom's Chandrasekhar also feels it could hit US more than India; "The fact is US needs H-1B visa workers because they have a skill shortage in some of the key areas of technology which H-1B has helped to fill. That gap has not been addressed and none of the measures which are contemplated do anything about the skills gap and nor are they (US) attempting to do that. So, merely plugging the inflow (of IT professionals) without plugging the root cause is really not going to benefit the country (US) and we believe it will hurt them and it will hurt us also".