THE FUTURE LANDSCAPE IN THE U.S. FOR INDIANS TAKING THE H & L VISA ROUTES
Mark I. Davies, Global Chairman, Davies & Associates,
Abhinav Lohia, Partner & Practice Chair-India, Davies & Associates,
President-Elect, Donald Trump’s election has come as a surprise to the world. For many immigrants, Trump’s election is bad news. This is primarily because of his strict stance on saving American jobs. Though he has not described his plans in detail, his intentions are loud and clear. No U.S. jobs should leave the country and no immigrant should take American jobs. He has walked the talk while dealing with Carrier Air Conditioners by preventing them from moving their manufacturing to Mexico and firing employees in the State of Indiana, U.S. Trump has also targeted Ford Motors who are also considering moving their manufacturing of certain cars to Mexico. Ford Motors are also ready to reconsider their decision, after meeting with Trump, subject to sustainable conditions to run their business in the U.S. He has threatened to impose 35 percent tax on goods manufactured outside U.S. to curtail the advantage of manufacturing products in Mexico. Trump has given speeches specifically criticizing Apple, Inc. for outsourcing the production of their Mac computers and iPhones in China, and that he would do anything he can to get Apple to start making their products in the U.S. He also loathes Disney for replacing American workers by Indian workers.
The Trump effect is not limited to manufacturing or FMCG industries, his election have the entire Silicon Valley concerned. Many feel Trump will pass stringent immigration laws preventing foreign workers from moving to the U.S. which will have a significant impact on the IT industry.
The reduction of H-1B Visa will have a significant impact on the Indian IT sector and prove to be counter-productive to U.S. IT sector
In a speech last March, Trump specifically targeted H visas and declared his intention to forever end the use of H-1B as a cheap labor program, and reaffirmed his aversion for outsourcing and the need to bring manufacturing jobs back home in the U.S. This has also rung alarm bells in the Indian IT Sector because Indians have been consistently awarded a significant number of H-1B visas in the IT Sector. Companies like Tata Consultancy Services (TCS), Infosys and Wipro depend on the H-1B program to service their clients in the U.S. The H-1B visa is a non-immigrant visa that allows U.S. companies to employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields. The H-1B quota is set at a total of 85,000 (65,000 plus an additional 20,000 for International students that graduate with master’s degree or higher from a U.S. University).
Proponents of the H-1B visa program have stated for years that the U.S. lacks the workforce to fill the specialized knowledge jobs in the IT Sector. Critics have criticized the program calling it a source of cheap labor. In light of the fact that the H-1B visa holders have to be compensated, according to prevailing wage for their profession, the cheap labor argument has little teeth. Trump has proposed raising the minimum prevailing wage for H-1B workers to take away the financial incentive of hiring international workforce. Senators Bill Nelson of the Democratic Party and Jeff Sessions of the Republican Party introduced in Congress to reduce the H-1B quota by 15,000 and reserve it only for high income positions.
Does it make sense financially to do away with H-1B visa or reduce the number of visas issued each year? Not really. The last time the H-1B visa quota was reduced it gave a boost to outsourcing. It was a win-win for the private companies and for foreign countries where the jobs were outsourced, the only loser was America. Not only did America as a country lose jobs to countries like India and China, they also lost the ability to impose income tax on foreign workers because they were employed overseas, hence, losing significant revenues. Although a reduction of quota will significantly impact Indian I.T. sector, it will also prove to be counter-productive to the U.S. I.T. sector. This will also have a ripple effect in the education industry. A reduction in H-1B quota will make U.S. less attractive to foreign students. Most foreign students take large student loans to study in the U.S. in the hopes of getting employed in U.S. and repaying their debt. A lot of foreign students will not consider the U.S. for higher education due to a lack of opportunity. Realistically, the H-1B program is essential for the American economy. It is essential for innovation in the IT industry because it keeps the labor costs in check, which allows capital to be invested in research and development. It is hard to imagine that the H-1B program will be done away with. However, it does seem realistic that the H-1B quota will be reduced and the prevailing wage will be increased to promote hiring of American workers. American IT companies will have to explore hiring of American workers and balance the cost by outsourcing more jobs abroad.