Panic Wave Sweeps Indian IT Industry as US Changes Visa Rules

he week started on a panicky note for IT firms in India as a legislation was introduced in the US House of Representatives on Monday mandating minimum wages of H1B visa holders at $130,000, more than double the present limit.

The H1B visa allows foreign employers to temporarily employee foreign nationals in specialty occupations.

If the legislation is passed, it will become extremely difficult for American companies to use H1B visas to hire foreign workers, which includes Indian IT professionals. According to the estimates of Richard Verma, the former U.S. ambassador to India, 70% of the 85,000 H1B visas issued last year went to Indian workers. The H1B visas, which are presently issued using a lottery system, are usually oversubscribed, with the demand for them in 2016 almost three times the number of visas available.

The Mumbai-based Bombay Stock Index (BSE) IT index nosedived by four percent while shares of Tata Consultancy Services (TCS), India’s biggest private sector employer and one of the global IT heavyweights, slumped by over five percent after the news of the legislation being introduced sent shockwaves across the world. Other industry giants like Infosys and Wipro witnessed a plunge of over four percent in their share values.

The bill, introduced by Congressman Zoe Lofgren, which is titled as the High-Skilled Integrity and Fairness Act of 2017, gives priority to market-based allocation of visas to those companies willing to pay as much as 200 percent of the wage calculated by a survey.

“The legislation offers a market-based solution that gives priority to those companies willing to pay the most,” said Lofgren. “This ensures American employers have access to the talent they need, while removing incentives for companies to undercut American wages and outsource jobs,” he added.

The legislation aims to eliminate the lowest pay category, and raises the salary level at which an H1B-dependent employer is exempt from non-displacement and recruitment attestation requirements to over $130,000, which is more than double the current H1B minimum wage of $60,000. At a time when the Indian IT industry is witnessing a demand shortage and is exploring cost-cutting avenues, this move by the Trump administration is set to trigger panic waves among IT professionals from India. It is noteworthy that the minimum H1B wage of $60,000 has been in force since 1989.

“My legislation refocuses the H1B program to its original intent – to seek out and find the best and brightest from the world, and to supplement the US workforce with talented, highly-paid, and highly-skilled workers who help create jobs here in America, not replace them,” added Lofgren.

The legislation will have a detrimental effect on the top Indian IT employers, and will force them to hire more local employees.

NASSCOM, the trade association of Indian IT and BPO industry, has also underlined its potential impact on America as it struggles to cope with the talent shortage that needs to be addressed by importing workers from countries like India.

“By 2018, there will be more than one million IT jobs lying vacant in the US and there are no candidates. Apart from the shortage in the available workforce, even in the Universities, more than 50% of the enrolments in the STEM program are foreign nationals. Even if you need to employ these foreign nationals, you need to have the H1B visa program. This is a reality,” commented R Chandrashekhar, the NASSCOM President, in a recent interview.