‘More curbs on H-1B visas to will hit small IT companies harder’

As the chorus for stricter curbs on H1-B visa gets louder, business of Indian IT companies, especially smaller sized ones will be impacted.

For Shankar Hegde, a 40-something owner of a small IT outsourcing company based out of Michigan, news of the Donald Trump administration’s plans to “revise” the definition of employment and specialty occupations under the H-1B visa is giving him sleepless nights. Currently, an H1-B visa is given for three years. The Department of Homeland Security (DHS) will also “revise the definition” of employment and employer-employee relationship to “better protect” US workers and wages. In addition, the DHS will propose additional requirements designed to ensure employers pay appropriate wages to H-1B visa holders.

Skill shortage

“If the administration goes ahead with this, it will make no sense as there is a shortage of Science Technology Engineering and Maths (STEM) talent.

Companies like the one Hegde runs are struggling with two issues and once the new proposal is out, it will add to their woes.

Hegde gives a simple example. Say, Amazon gives us a project. We take around six months – from getting a nod to doing a pilot. For this we will use our existing 15 people but in some cases we may need to hire someone from with skillset, say a designer. That would take some time and then if the pilot is successful and the scope of the project becomes wider, there is a need to add more.” All this takes time and multiply that with other projects, one can understand the headache.

Other small IT companies echoed similar views but all of them did not want to disclose their company names. The cost for an H1-B visa for an employer with less than 26 full time employees works out to be $1,700 and upwards for higher number of visa users.

However, smaller companies get a lesser share of H1-B visas when compared with large ones like TCS or Infosys.

While there is no supporting data, Indian companies get 70 per cent of the 85,000 H1-B visas given out every year through a lottery system. American origin tech employees have raised their voices against companies for abusing the H1-B visa programme by using business visas (B1) and laying off US workers to replace them with Indian workers. Industry watchers opine that the Trump administration is cracking down on this abuse.

But hiring US nationals is expensive, especially for smaller companies. “It will in all likelihood affect smaller companies more because they generally have limited positions to fill,” said Vivek Tandon -CEO & Founder EB5 BRICS. Mark Davies, Global Chairman of Davies & Associates added that smaller clients tend to have less flexibility than some of the larger clients and hence will be impacted more.

Reverse brain drain

Others have a different point of view.

According to advocate Pankaj Sinha, founder of Right Direction, a law firm, reverse brain drain could be a benefit for India as it brings in more money. with the new reforms and documentation, the “cost”will be a massive hit for the small IT firms.

Meanwhile, larger companies like TCS, Infosys, Wipro, Cognizant and HCL Tech are hiring STEM graduates in the US and even partnering with some of the universities to meet their talent requirements.

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