Photo credit: Gage Skidmore.
India’s fears over the impact of Donald Trump being US president – the country accounts for the lion’s share of Indian IT services exports – became a reality this week. US Citizenship & Immigration Services (UCIS) has announced a suspension of “premium processing” of H-1B visas from April 3. These non-immigrant visas enable highly skilled tech workers to be employed in the US.
Microsoft, Google, and Amazon are among the tech giants that have criticized the move because of its impact on their business. But Indian IT giants like Infosys and Wipro will feel its effects, too, because they relied on H-1B visas to move workers quickly and temporarily to the US when projects came up. Fast-tracking of the visas with payment of a premium was vital to this process.
H-1B visas normally takes three to six months to get approved, and the process can stretch to a year or more because of the large number of applications and backlogs. Premium payment expedited this to 15 days. Now that option is gone.
India’s IT services companies are affected, in particular, because their requirements fluctuate. And it costs much less to maintain workers in India and move them to the US only when the need arises. Indian software industry body Nasscom admitted that a change in the visa regime will lead to process delays and higher operational costs for Indian IT companies.
The scale of its impact will be substantial on a country that accounts for more than half of the world’s outsourcing. Exports of Indian IT and IT-enabled services are projected to earn US$118 billion this financial year, even after Nasscom scaled back its growth projection to 8-10 percent from the 10-12 percent at the start of FY 2016-17. Nasscom has given no projection for the next financial year, “going by the fact that there are a number of uncertainties.”
The random shootings of three Indian techies in the US over the past couple of weeks has accentuated the sentiment.
US tech companies, too, will feel the pain. They have used the H-1B system to reduce costs and improve efficiency, apart from gaining valuable talent. Microsoft and Google have CEOs who grew up in India and moved to the US after graduation. Three-quarters of Fortune 500 companies use Indian IT services.
The Indian IT industry will be hoping that pressure from US tech companies will eventually prevail over Trump’s political rhetoric against foreign workers. But there’s no getting away from an immediate impact starting as early as next month, when applications open for the next financial year’s H-1B visa quota of 85,000. Without premium processing, fresh visas will reduce to a trickle in the next few months.
This is likely to cause a spike in demand for existing H-1B visa holders, who will consequently become costlier to hire. But Indian techies in the US are far from rejoicing over this. On the contrary, they fear a cutback in jobs as tech companies scramble to keep an even keel in this sudden change in environment.
One Indian techie, who did not want to be identified, told me that his entire division at a US multinational company got laid off, and 40 corresponding new positions created in India. If the movement of workers to the US gets restricted, we may start seeing more of this happening.
Another Indian tech worker in the US has put her apartment up for sale because she’s unsure of getting a fresh H-1B visa in time if she has to change jobs. Many foreign techies – mainly from India and China – are suddenly unsure about getting green cards or American citizenship – the path taken by many before them as they settled into their professional lives in the US.
Reversal of brain drain
Some in India see a silver lining in this for India, which has suffered a brain drain to the US for decades. The brightest minds from India’s premier engineering colleges have gone abroad to work for American companies as they did not find suitable opportunities in India.
But this is changing. Tech students are increasingly choosing to stay in India, the world’s fastest growing large economy with an emerging startup ecosystem.
Last week at a fintech startup event in Mumbai, the special chief secretary of the southern state of Andhra Pradesh, J A Chowdary, made no secret of welcoming the return of tech talent to India on account of protectionist moves in the West, during an informal chat with me. He was attending the event to invite startups in India’s financial capital to visit Vizag on the east coast, where the state government is laying the foundations for a new fintech hub.
It’s too early to see a tangible impact of US policy on India’s startup hubs. But a change in sentiment is palpable when one talks to Indian techies either in India or the US. The shootings of three Indian techies in the US over the past couple of weeks has accentuated the sentiment.
This pretty much sums up how my Indian clients feel right now. I am expecting a dramatic drop in H-1B Cap cases this year. #h1bvisa pic.twitter.com/9eHjabPYrZ
— StephanieScarborough (@SScarborough) March 3, 2017
After a gold rush into consumer internet startups, which are going bust, investors are shifting their focus to deep tech startups in India. World class tech talent with exposure to global clients could turn India into an innovation hub. So, even though IT services exports from India will feel the pain of US curbs, the gain in the long run could well be more fundamental.
See: AI and IoT define the new India – not outsourcing or ecommerce
This post India’s pain and gain from the US’ curb on H-1B visas appeared first on Tech in Asia.